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When you leave money to a family member in your will, they typically do not need to pay income taxes on the inheritance. However, there may be other taxes involved: 1. Estate tax: This is a federal tax that may apply to your estate if its value exceeds the federal estate tax exemption amount for the year of your death. For 2023, the basic exclusion amount is $12,920,000. If your estate is worth less than the exclusion amount, no federal estate tax should be due. Keep in mind that estate tax rates and exemptions can change, so it's important to stay informed about the current regulations. 2. State inheritance/estate tax: Some states also have their own estate or inheritance taxes, which may apply to the assets you leave to your family members. The rules and tax rates, as well as the exemption thresholds, vary by state. If you live in a state that imposes its own inheritance or estate tax, it's essential to research the specific rules for that jurisdiction. 3. Capital gains tax: Although your family member typically won't owe income taxes on the money they inherit, they might be subject to capital gains tax if they sell inherited assets, such as stocks or real estate, that have increased in value since you acquired them. The capital gains tax would apply to the difference between the asset's sales price and its stepped-up basis, which is generally its fair market value at the time of your death. Keep in mind that tax laws are subject to change, and it's always a good idea to consult with a tax professional or attorney to ensure the most up-to-date and accurate information for your specific situation.