Created in 1916, the Federal estate tax is a tax on the transfer of property from a deceased person to their heirs at death. Because it applies only to that portion of an estate’s value that exceeds an exemption amount, the tax has never affected a large share of estates. Moreover, legislation enacted over the last several years has greatly reduced the scope of the tax. The tax exemption has increased from $675,000 in 2000 to $11.58 million in 2020. Under present law, the estate of a person who at death owns assets in excess of the exemption amount must file a Federal estate tax return. However, only returns that have an estate above the exemption after deductions for expenses, debts, and bequests to a surviving spouse or charity are subject to tax at a rate of 40 percent.