Estate Tax Calculator
Estimate federal estate tax for 2026, 2025, or 2024. OBBBA (signed July 2025) made the $15M per-person exemption permanent from 2026 onward. Enter your estate value, deductions, and prior gifts to see if your estate exceeds the exemption and what tax may be owed.
Estimated Estate Tax
$0
Estate is within the $15,000,000 exemption
| Detail | Amount |
|---|---|
| Gross Estate | $5,000,000 |
| Total Deductions | -$150,000 |
| Taxable Estate | $4,850,000 |
| Exemption (2026) | $15,000,000 |
| Exemption Remaining | $10,150,000 |
| Net Estate Tax | $0 |
Taxable Estate
$4,850,000Estate Tax
$0Effective Rate
0.00%The federal estate tax exemption is $15,000,000 for 2026, unified with the lifetime gift tax exemption. OBBBA (signed July 2025) made the $15M per-person base permanent starting 2026, indexed for inflation thereafter — the previously scheduled 2026 sunset no longer applies. Consult an estate planning attorney for state estate tax exposure and planning around portability, ILITs, and GRATs.
Edit inputs ↑OBBBA made the $15M exemption permanent
The Tax Cuts and Jobs Act of 2017 doubled the federal estate/gift lifetime exemption from roughly $5M to $10M (indexed). That doubled level was scheduled to sunset on 31 December 2025, reverting to a ~$7M-indexed exemption on 1 January 2026. The One Big Beautiful Bill Act (Public Law 119-1, signed July 2025) eliminated the cliff: §70102 sets a new permanent base of $15,000,000 per person starting 2026, indexed for inflation thereafter using the post-OBBBA chained-CPI methodology. No more sunset; no more cliff-driven year-end planning rushes that defined estate practice for the prior two years.
Practical effect: a married couple can now shield $30,000,000 of lifetime wealth combined from federal estate tax through 2026 onward (using portability — see below), with that combined figure inflation-indexed annually. Federal estate tax now affects approximately 0.1% of decedents in the US — but state estate and inheritance taxes (with thresholds as low as $1M in Oregon and Massachusetts) catch many more families.
Federal exemption history 2024-2026
| Year | Per person | Married (portability) | Annual gift exclusion | Source |
|---|---|---|---|---|
| 2024 | $13,610,000 | $27,220,000 | $18,000 | Rev. Proc. 2023-34 |
| 2025 | $13,990,000 | $27,980,000 | $19,000 | Rev. Proc. 2024-40 |
| 2026 (OBBBA permanent) | $15,000,000 | $30,000,000 | $19,000 | OBBBA §70102 + Rev. Proc. 2025-32 |
Top federal estate tax rate: 40% on taxable estate above the exemption. The tax rate graduates from 18% on the first $10,000 of taxable estate to 40% on amounts above ~$1M — but because the unified exemption is much larger, in practice every taxable estate is in the top 40% bracket from the first taxable dollar.
Portability and the DSUE election
A surviving spouse can claim the deceased spouse's unused exemption ("DSUE") — but only by timely filing Form 706 within 9 months of death (15 months with extension). This is the "portability election." If the first-to-die's estate doesn't owe tax, the family often skips Form 706 to save legal fees — which silently forfeits the DSUE. Lost DSUE in a $15M-per-person world means $15M of potentially-shielded growth could become taxable when the second spouse dies.
Rev. Proc. 2017-34 (extended and refined in subsequent guidance) lets executors file a "portability-only" Form 706 within 5 years of death via simplified procedures — much longer than the original 9 months. But the safe move is to file timely. Total cost: typically a few thousand dollars in legal/CPA fees; potential savings: millions of dollars of estate tax on the second death.
DSUE only applies to federal exemption, not state. States with their own estate tax (Massachusetts, Oregon, NY, etc.) generally have NO portability, meaning unused state exemption from first spouse is lost forever. Bypass trusts (also called credit shelter or A/B trusts) can preserve state exemption — a planning lever that survived the federal portability era despite being "obsolete" at the federal level.
Annual gift exclusion and lifetime exemption coordination
Two parallel mechanics reduce the taxable estate:
- Annual exclusion gifts ($19,000 per recipient, 2026; $19,000 for 2025). Gifts at or below the annual exclusion don't reduce the lifetime exemption. A couple can each give to each of their 4 children + 8 grandchildren — that's 2 donors × 12 recipients × $19,000 = $456,000 of estate value removed per year, no exemption consumed.
- Lifetime exemption gifts (above the annual exclusion). Taxable gifts during life consume the lifetime exemption dollar-for-dollar; remaining exemption applies at death to whatever estate is left. Report gifts above the annual exclusion on Form 709 (gift tax return). No actual tax is owed until the cumulative lifetime gifts exceed $15,000,000 per donor.
- Tuition and medical payments (unlimited). Direct payments to a qualified educational institution for tuition (NOT room and board) or directly to medical providers don't count against the annual exclusion or lifetime exemption — under §2503(e). Stack these on top of cash gifts to maximize annual transfer capacity.
- Charitable bequests (unlimited). Bequests to qualified charities receive an unlimited charitable deduction from the gross estate — full removal from the taxable base.
- Marital deduction (unlimited). Outright transfers to a US-citizen surviving spouse remove assets from the first-to-die's taxable estate completely — deferring tax until the surviving spouse's eventual death (and absorbing the DSUE). Non-citizen spouses need a QDOT to qualify.
Trust strategies for taxable estates
ILIT — Irrevocable Life Insurance Trust
Owns life insurance OUTSIDE the taxable estate. Premiums funded via annual exclusion gifts. Policy death benefit pays heirs free of estate tax, while preserving lifetime exemption for other assets.
GRAT — Grantor Retained Annuity Trust
Transfers expected investment appreciation to heirs while the grantor retains an annuity stream. If the trust assets grow faster than the §7520 hurdle rate, the spread passes gift-tax-free. Particularly effective in low-rate environments.
CLAT/CLT — Charitable Lead Trust
Pays a charity an annuity for a term of years; remainder goes to heirs. Reduces or zeroes out the gift to heirs for transfer-tax purposes while still leaving substantial value (if assets outperform §7520).
SLAT — Spousal Lifetime Access Trust
Each spouse creates an irrevocable trust for the benefit of the other, using their respective lifetime exemptions. Both retain indirect access via the spouse-as-beneficiary structure. Watch the "reciprocal trust doctrine" — trusts must differ in terms.
QPRT — Qualified Personal Residence Trust
Transfers a personal residence to heirs at a discounted gift value (because the grantor retains use for a term of years). Best used in moderately-rising real estate markets where survival probability is high.
Dynasty trust
Long-term irrevocable trust designed to skip estate tax at multiple generations using the generation-skipping transfer (GST) exemption — same $15,000,000 cap as the lifetime exemption per person, but allocated to GST-exempt trusts. States with no rule against perpetuities (Delaware, South Dakota, Nevada) commonly used.
With OBBBA's permanent $15M base, the legal and trustee costs of complex trust structures often outweigh the federal tax benefit for estates under ~$20M per person. The bigger driver for trusts is now state estate tax mitigation, asset protection, and multi-generational governance — not federal exemption planning.
Basis step-up at death
Assets held in the decedent's estate at death receive a "step-up" in cost basis to fair market value on the date of death under IRC §1014. Heirs who later sell those assets pay capital gains tax only on appreciation AFTER the date of death — pre-death appreciation escapes tax entirely. For a stock bought decades ago at $10/share and worth $200/share at death, the heir's basis is $200; immediate sale produces zero capital gain.
The step-up rule is what makes "hold appreciated assets until death" a legitimate strategy for non-taxable estates. Lifetime gifts of appreciated assets transfer the donor's lower basis to the recipient (no step-up), so giving stock during life and bequeathing it at death have very different tax outcomes. For estates that WILL owe tax, the arithmetic comparison between estate tax (40%) and post-step-up capital gains tax (20% + 3.8% NIIT = 23.8% at most) determines whether it's worth keeping the asset in the taxable estate.
State estate and inheritance taxes
12 states + DC impose their own estate tax with thresholds far below the federal level. 5 states impose an inheritance tax (paid by beneficiaries based on relationship to decedent, not on the estate itself). Maryland is the only state with both.
| State | Type | Threshold (2025) | Top rate |
|---|---|---|---|
| Oregon | Estate | $1,000,000 | 16% |
| Massachusetts | Estate | $2,000,000 | 16% |
| Washington | Estate | $2,193,000 | 20% |
| Illinois | Estate | $4,000,000 | 16% |
| Minnesota | Estate | $3,000,000 | 16% |
| New York | Estate (cliff) | $7,160,000 | 16% |
| Connecticut | Estate | $13,990,000 | 12% |
| Kentucky | Inheritance | Varies by class | 16% |
| Pennsylvania | Inheritance | No threshold | 15% |
New York's estate tax has a notorious "cliff" — once the estate exceeds 105% of the exemption, the exemption phases out entirely and the entire estate is taxed. Other estate tax states also have CT, DE, DC, HI, ME, MD, RI, VT. State estate planning often dominates federal planning for mid-tier wealth ($2M–$10M) in those jurisdictions.
Frequently asked questions
What is the federal estate tax exemption?
The federal estate tax exemption is $15 million per person for 2026 (OBBBA made the $15M base permanent starting 2026, indexed thereafter), $13.99 million for 2025, and $13.61 million for 2024. Estates below this amount owe no federal estate tax. Married couples can effectively double the exemption through portability — $30M combined in 2026.
What is the unlimited marital deduction?
You can leave an unlimited amount to a surviving spouse who is a U.S. citizen without triggering estate tax. This effectively defers estate tax until the surviving spouse passes away. Non-citizen spouses can receive assets through a Qualified Domestic Trust (QDOT).
How do prior gifts affect estate tax?
The estate tax and gift tax share a unified exemption. Any taxable gifts made during your lifetime (above the annual exclusion) reduce the estate tax exemption available at death. The tax is calculated on the combined total of your taxable estate plus prior taxable gifts.
Do states have their own estate tax?
Yes, some states impose their own estate or inheritance taxes with much lower exemption thresholds. States with estate taxes include Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington, and DC. Exemptions range from $1 million to $7.1 million.
What is portability and how do I claim it?
Portability lets a surviving spouse use the deceased spouse's unused exemption (DSUE). You claim it by filing Form 706 within 9 months of death (15 months with extension). Rev. Proc. 2017-34 + later updates allow late portability-only Form 706 filings up to 5 years post-death under simplified procedures. Without filing, the DSUE is permanently lost — a common and costly omission for "non-taxable" first-death estates.
Are life insurance proceeds included in the estate?
Yes — if you owned the policy or had any "incidents of ownership" at death, the death benefit is included in your gross estate at face value. An Irrevocable Life Insurance Trust (ILIT) holding the policy removes it from your estate (must be owned by ILIT for 3 years pre-death to fully escape under the §2035 lookback). Life insurance proceeds are always income-tax-free to the beneficiary; the estate-tax question is independent.
What is the difference between estate tax and inheritance tax?
Estate tax is paid by the estate before assets are distributed — federal estate tax and most state-level estate taxes work this way. Inheritance tax is paid by individual beneficiaries based on what they inherit and their relationship to the decedent (closer relatives often pay lower rates). Five states (Iowa, Kentucky, Maryland, Nebraska, Pennsylvania) have inheritance taxes; Maryland uniquely has both.
Do retirement accounts go through estate tax?
Yes — 401(k), IRA, Roth, pension balances are all included in the gross estate at fair market value. They also generate income tax to the beneficiary when distributed (Traditional accounts) under the inherited-IRA 10-year rule (SECURE Act 2019). Beneficiaries can claim a §691(c) "income in respect of decedent" deduction on Schedule A for the portion of estate tax paid on the IRA balance — a frequently-overlooked credit worth thousands.
What happens if my estate is exactly at the exemption?
No federal estate tax is owed if the taxable estate equals or is below the exemption ($15,000,000 per person in 2026). But Form 706 is still required if the gross estate exceeds the exemption, even if deductions bring the taxable estate to zero — and Form 706 IS required to elect portability for the surviving spouse, regardless of whether tax is owed.
Can I gift away my entire exemption in one year?
Yes — a single donor can give up to $15,000,000 in cumulative lifetime gifts before owing gift tax. File Form 709 to report the gift; the lifetime exemption is reduced by that amount; remaining exemption applies at death. The anti-clawback rule means OBBBA's $15M base applies — any gifts made when the exemption was at TCJA's $10M-indexed level are "grandfathered" against future exemption reductions if Congress ever reduces.
How is appreciated property handled — gift vs bequest?
Critical difference. Lifetime gift: recipient takes the donor's original basis (carryover basis) — they'll pay capital gains tax on all pre-gift appreciation if they ever sell. Bequest at death: recipient gets a step-up to fair market value at date of death — pre-death appreciation escapes capital gains tax forever. For appreciated assets in a non-taxable estate, holding until death usually wins; for taxable estates, the math depends on the spread between estate-tax rate and post-step-up capital gains rate.
What is the GST (generation-skipping transfer) tax?
A separate transfer tax that prevents wealthy families from avoiding multiple rounds of estate tax by skipping generations (e.g., grandparent to grandchild). The GST exemption is unified with the estate/gift exemption ($15,000,000 per person in 2026) but must be specifically ALLOCATED to GST-exempt trusts. The GST rate is the maximum estate tax rate (40%). State-level perpetuity rules in Delaware, South Dakota, Nevada, and others enable multi-generational dynasty trusts that use the GST exemption optimally.
Sources
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