Federal estate tax,
calculated to the dollar.

Field guide

How the U.S. federal estate tax works.

The federal estate tax is a tax on the transfer of wealth at death. It is levied on the gross estate of a decedent — the fair market value of everything they owned on the date of death , minus certain allowable deductions. The net result is the taxable estate, and only the portion of the taxable estate that exceeds the basic exclusion amount (BEA) is subject to tax.

Despite its reputation, the estate tax affects very few Americans. The 2026 BEA is approximately $13.99 million per individual: meaning a single person can leave up to $13.99 million to anyone they choose without incurring a dollar of federal estate tax. Married couples, through a mechanism called portability, can effectively double that to roughly $27.98 million.

The basic exclusion amount and the unified credit

The BEA is sometimes called the lifetime exemption or the unified credit equivalent. The IRS doesn't actually exempt the first $13.99 million. Instead, it computes a tentative tax on the full taxable estate, then subtracts a pre-computed unified credit equal to the tentative tax on the exemption amount. The two approaches produce identical results; the tentative-tax method is used here because it correctly handles estates that include prior taxable gifts.

The BEA was dramatically increased by the Tax Cuts and Jobs Act of 2017, which doubled the exemption and indexed it for inflation. It has risen each year since: $11.18M (2018) → $11.58M (2020) → $12.06M (2022) → $12.92M (2023) → $13.61M (2024) → $13.99M (2025). For 2026, the IRS has announced the final inflation-adjusted figure. The “Federal exemption” field in this calculator is editable so you can model any scenario.

What counts as your gross estate

The gross estate includes the fair market value of every asset the decedent owned or had certain interests in on the date of death:

• Real estate: primary residence, vacation homes, investment properties, bare land. Value is FMV, not the purchase price or the assessed value for property taxes.
• Financial accounts: brokerage accounts, bank accounts, certificates of deposit, bonds, and publicly traded stocks valued at their date-of-death closing price.
• Retirement accounts: IRAs, 401(k)s, 403(b)s, and defined-benefit pension values. These are included at their full pre-tax value, even though beneficiaries will owe income tax on withdrawals.
• Life insurance proceeds: if the decedent owned the policy (i.e., had the right to change the beneficiary, borrow against it, or surrender it), the death benefit is included in the estate. Policies owned by an irrevocable life insurance trust (ILIT) are generally excluded.
• Business interests: sole proprietorships at FMV; ownership stakes in partnerships, LLCs, S-corps, and C-corps valued using accepted business-valuation methods.
• Other assets: vehicles, boats, jewelry, art, collectibles, notes receivable, and any other property with ascertainable value.

Allowable deductions that reduce the taxable estate

IRC §§2053–2056 allow four major categories of deductions, each of which reduces the taxable estate dollar-for-dollar:

• Debts and mortgages: any valid debt of the decedent that is enforceable against the estate, including mortgage balances, credit-card balances, and personal loans.
• Administration and funeral expenses: executor commissions, attorney and accountant fees, court costs, appraisal fees, and funeral and burial costs. These are typically 2–5% of the gross estate.
• Charitable bequests: transfers to qualifying organizations under IRC §501(c)(3) are deductible without limit. A bequest of the entire estate to charity results in zero estate tax.
• Marital deduction: outright transfers or qualifying transfers in trust to a surviving U.S. citizen spouse are deductible without limit. This is the most commonly used large deduction: it defers estate tax until the second spouse dies rather than eliminating it permanently. Non-citizen surviving spouses require a qualified domestic trust (QDOT) to use this deduction.

Prior taxable gifts and the unified transfer-tax system

The federal gift tax and estate tax are unified into a single lifetime tax system. Taxable gifts made after 1976. Those exceeding the annual exclusion ($19,000 per recipient per year in 2025) and the lifetime BEA — use up the same unified credit that would otherwise shield the estate.

When computing the estate tax, all post-1976 cumulative taxable gifts are added back to the taxable estate to form the combined base. The tentative tax is computed on that combined figure, and the unified credit is subtracted. Prior gifts taxed in the year they were made are not double-taxed because their gift-tax liability was already paid; only the rate calculation uses the combined base to ensure the estate's marginal dollars are taxed at the correct bracket.

The rate schedule: progressive up to 40%

The federal estate tax rate schedule runs from 18% on the first $10,000 of taxable amount to 40% on everything above $1 million of taxable amount. Because the BEA ($13.99 million) is itself well above the $1 million threshold, virtually all of any taxable estate that exceeds the BEA falls in the 40% bracket. The lower marginal rates apply only to the first $1 million above the exemption, a negligible fraction of any estate large enough to trigger the tax.

State estate and inheritance taxes

Twelve states and the District of Columbia impose their own estate taxes, often with much lower exemptions than the federal level. Oregon and Massachusetts begin taxing estates above $1 million; Connecticut starts at $13.61 million (mirroring the federal figure); Washington State uses $2.193 million. Six states — Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania — levy an inheritance tax on the recipient rather than the estate, with rates and exemptions that vary by the heir's relationship to the decedent. This calculator covers federal tax only.

Common strategies to reduce the federal estate tax

Estate planning professionals use several strategies to lawfully minimize estate tax exposure:

• Annual gift exclusion: gifting up to $19,000 per recipient per year (in 2025) removes assets from the estate without reducing the BEA, compounding significantly over time.
• Irrevocable life insurance trust (ILIT): placing a life insurance policy inside an ILIT removes the death benefit from the gross estate while still providing liquidity to pay estate taxes or support heirs.
• Grantor retained annuity trust (GRAT): transfers future appreciation of assets to heirs with minimal gift-tax cost, effective when assets are expected to grow faster than the IRS hurdle rate.
• Charitable remainder or lead trusts: combine estate-tax and income-tax benefits by benefiting charity while passing residual or lead interest to heirs.
• Valuation discounts: interests in family limited partnerships (FLPs) or LLCs are often valued at a discount for lack of control and marketability, legally reducing their estate value.
• Portability election: a surviving spouse can claim the deceased spouse's unused exclusion (DSUE) by filing a timely estate-tax return, effectively doubling the combined exemption without complex trust structures.