What is the difference between “estate taxes” and “income taxes”?
Income taxes are due on income you earn. They also apply to deferred income, such as IRA’s and 401k’s. Estate taxes are paid on the net value of your estate as it passes to your beneficiaries. They are in addition to any income tax due. Estate taxes can be very high, but apply after a relatively high personal exemption. Much “estate planning” is designed to minimize these confiscatory taxes.
