An inheritance tax is derogatorily referred to as a death tax in the United States and as death duties in the United Kingdom. This is a State and not a federal Tax. A Federal Tax is an Estate Tax. Inheritance taxes are those levied on specific property passed to any individual by the deceased. Exemptions to this law are usually property left to those relatives who fall into Class A. These are the surviving spouse and children. Grandchildren and parents also fall into this category and are exempt from an inheritance tax. All others must pay if the property in question exceeds the amount of $US 1.5 million. The amount you will owe the government will depend upon the value of the inherited property. Estate planning is one way to reduce the payment of an inheritance tax.