This year, the first $15,000,000 of an estate is exempt from federal taxes, so unless it is on top of a different $14,000,001 in estate net assets, the estate tax (a tax on the estate) on that $1,000,000 house is $0. [0]
Some U.S. states have an additional inheritance tax (payable by the inheritors). Those rules vary. [1]
Why? Inheritance taxes are kinda stupid anyway, you already taxed it when it went to the parents, taxing again when moving those assets to next of kin is double dipping.
I can understand step up being considered unfair but the alternative is someone inheriting their family's stuff and getting slapped with a potentially huge tax bill they don't have the cash to afford.
Well I think the idea is it wasn't already taxed in many cases. If you have assets that have greatly appreciated then that appreciation was never taxed.