For Federal purposes there is an estate tax on the on the estate of the decedent. However, the first $11.4 million dollars is exempt. So only those with significant assets pay a Federal estate tax. So, in general there is no tax on inherited money for Federal purposes. However, the exception is, if the money received is in a tax deferred account (i.e. 401K or IRA) the beneficiary will be required to pay income tax when they receive distributions from the 401K or IRA.
For Pennsylvania purposes there is an inheritance tax. For PA resident decedents the tax is imposed on all tangible property owned in PA and all intangible property. The rate varies on the relationship of the decedent and beneficiary:
0 percent on transfers to a surviving spouse or to a parent from a child aged 21 or younger;
4.5 percent on transfers to direct descendants and lineal heirs;
12 percent on transfers to siblings; and
15 percent on transfers to other heirs, except charitable organizations, exempt institutions and government entities exempt from tax
Pennsylvania does not tax gifts, so a strategy to reduce Pennsylvania inheritance tax is to gift money or property in advance. However, Pennsylvania does have a one-year lookback period, that will subject gifts made within one year of death to inheritance tax.