Do I pay taxes on an inheritance?

Most inheritances are not subject to federal income tax when received. If you sell inherited assets, you pay capital gains tax on appreciation above the stepped-up basis. Inherited IRA distributions are taxed as ordinary income. Some states have inheritance tax — check your state's rules.

What is the 10-year rule for inherited IRAs?

Under the SECURE Act, most non-spouse beneficiaries must withdraw all funds from an inherited IRA within 10 years of the original owner's death. There are no required annual distributions within those 10 years, but strategic annual withdrawals usually minimize taxes.

What should I do first when I inherit money?

Wait 30 days before making major financial decisions. Secure the assets, understand what you've inherited and any obligations, consult a fee-only financial planner, and research the tax implications.

What is the average inheritance in the US?

The Federal Reserve's Survey of Consumer Finances shows the average inheritance is approximately $46,000, but the median is much lower — around $11,000-$15,000.

Inheritance & Estate Planning Guide 2026 — What to Do When You Inherit

The average American inheritance is approximately $46,000 according to Federal Reserve data, though the distribution is highly unequal.

Key 2026 inheritance figures:

Item	2026 Figure
Federal estate tax exemption	$13.99 million (individual)
Annual gift tax exclusion	$18,000 per recipient
Inherited IRA distribution period	10 years (non-spouse beneficiaries)
Step-up in cost basis	Applies to inherited assets at date of death
Average inheritance received	~$46,000 (Federal Reserve SCF)

The First 30 Days After an Inheritance

The most important rule: do nothing major for 30 days. Grief and urgency create poor financial decisions. Use the first month to:

Secure the assets and ensure proper titling
Inventory what you received and any obligations attached
Understand the tax implications (stepped-up basis, required distributions)
Consult a fee-only financial planner before making irreversible decisions

Federal Estate Tax: Who Actually Pays?

Only estates exceeding $13.99 million owe federal estate tax. Fewer than 0.1% of estates qualify. Most heirs owe zero federal estate tax. The stepped-up cost basis rule is the most valuable tax benefit most heirs receive — inherited assets are revalued at the date-of-death market price, wiping out embedded capital gains.

Average Inheritance Data

Average Inheritance in America: By Age, Generation & Net Worth (2026)

What to Do With an Inheritance

Inherited Retirement Accounts

Inherited Property

Estate Planning Basics

Funeral Costs

Average Cost of a Funeral in 2026 (Complete Guide)

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy