Your question is referring to multiple kinds of taxes -- and it is definitely a confusing area.
There is an exclusion from estate tax for $13.61 million per individual for 2024. But that is very different than income taxes. [Note: this exemption amount could be reduced dramatically after 2025 if certain tax laws are not renewed.] If someone dies with an estate of more than the exclusion amount, then there is a tax imposed on the estate -- not on the beneficiaries -- on the excess amount.
The estate tax affects almost nobody, currently. But, there are types of funds that you can inherit that are subject to income tax. Generally, if those funds would have been taxable to the person who died, then they will be taxable to the heirs as well.
This is why you have to pay income taxes on funds that you inherit from someone's traditional IRA. If they had lived to take withdrawals from that IRA, they would have had to pay income tax on the withdrawals. Likewise, so with the people who inherit the traditional IRA funds. Most beneficiaries have a time limit for withdrawing funds from an inherited traditional IRA. And, if the IRA's former owner was subject to Required Minimum Distributions, then the beneficiary will be as well.
Roth IRA accounts that are less than five years old ALSO have an income tax due on earnings (not contributions). So there may even be income taxes due on an inherited Roth IRA. Even if there are no taxes due because the Roth IRA is old enough, there is still a time limit for withdrawing all funds from the account for most beneficiaries.
There is a lot of information from the IRS that will help with what time frames and rules apply to different kinds of accounts and different types of beneficiaries: Retirement topics - Beneficiary
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