Inheritance tax rates are legally charged on estates acquired through inheritance or will. Inheritance tax rates are quite varied and can vary by several times than that of general wage income, or even more. As people plan for their future, they may want to consider estate planning options that can help reduce the effects of taxes on their inheritance.
Legacy tax rates around the world vary, but in most cases, there are lower rates for inheritances that are left to children or grandchildren over parents or other close relatives. In countries with an inheritance tax, it is important to understand the rate that applies to your specific situation and the various ways you can reduce or avoid paying taxes on your inheritance.
There are three main methods used to calculate an individual's inheritance tax liability: the weighted average method, the flat-rate method, and the net-of-tax method. The weighted average method uses a consideration of both taxable and nontaxable estates to calculate a tax payable.
The flat-rate method stipulates a set amount that is payable regardless of how much property an individual inherits. The net-of-tax method takes into account not only the value of an individual's estate but also any applicable federal and provincial/state taxes owed on it.
Inheritance tax rates around the world can vary a lot, depending on the country and its laws. In general, taxes are usually levied at a rate of 40% in most developed countries, with ranges from 25% to 75%. There are also additional taxes that may apply such as value-added or estate duty in some cases.