For example, volunteer fire companies and governmental units are often exempted from paying gas taxes. Gasoline taxes are often refunded to farmers for gasoline used in their farming operation. Inheritance Tax and Estate Taxes Inheritance tax is a tax that is imposed on the transfer of property after the owner's death. Under the inheritance tax system, the beneficiary of the property must pay the tax. As with a state personal income tax system, the inheritance tax will be determined by the flat rate method or graduated rate method.
Most states impose an inheritance tax.
Estate tax is different from inheritance tax in that estate tax is imposed on the entire estate of the individual. The federal governmnet and some states use the estate tax system. Most states impose a corporate income tax, which makes corporations subject to income tax just as individuals are. As with state personal income tax systems, state corporate income tax system use the graduated method in some states and the flat rate method in others. Some states purposely keep their corporate income tax rates lower than other states as part of their business incentives.