Estate Tax Calculator

Understanding the Federal Estate Tax

The federal estate tax is a tax on the transfer of property upon death. It applies to the total fair market value of a deceased person's assets minus allowable deductions. Only estates exceeding the applicable exemption amount — $13.61 million for 2024 or $13.99 million for 2025 — owe federal estate tax. The tax rates range from 18% to 40% on the taxable amount above the exemption.

How the Estate Tax Calculator Works

1. Enter your gross estate value — the total fair market value of all assets including real estate, investments, bank accounts, retirement funds, business interests, and life insurance proceeds payable to the estate.
2. Subtract allowable deductions — funeral and administrative expenses, outstanding debts and mortgages, the unlimited marital deduction (for assets left to a surviving U.S. citizen spouse), charitable bequests, and other deductions.
3. Add prior taxable gifts — lifetime gifts that exceeded the annual gift tax exclusion ($18,000 per recipient for 2024) are added back to compute the tentative tax base.
4. Apply graduated tax brackets — the tentative tax is calculated using progressive rates from 18% to 40%.
5. Subtract the unified credit — this credit effectively exempts the first $13.61M (2024) or $13.99M (2025) from tax.

Federal Estate Tax Brackets (2024–2025)

Key Deductions That Reduce Estate Tax

• Unlimited Marital Deduction: Any assets left to a surviving U.S. citizen spouse are completely exempt from estate tax. This is one of the most powerful estate planning tools available.
• Charitable Deduction: Bequests to qualified charitable organizations reduce the taxable estate dollar-for-dollar with no limit.
• Debts and Expenses: Outstanding mortgages, loans, funeral costs, and estate administration expenses are fully deductible.

The 2026 Exemption Sunset

The Tax Cuts and Jobs Act of 2017 roughly doubled the estate tax exemption through 2025. Without new legislation, the exemption is projected to drop to approximately $7 million in 2026 — meaning estates that were previously exempt may face significant tax liability. This makes 2024-2025 a critical window for estate planning strategies such as lifetime gifting, irrevocable trusts, and charitable giving.

Estate Tax vs. Inheritance Tax

The federal estate tax is paid by the estate before assets are distributed. An inheritance tax, by contrast, is paid by the beneficiary receiving assets. There is no federal inheritance tax, but six states impose one: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Maryland is the only state with both an estate tax and an inheritance tax.

Tips for Reducing Estate Tax Liability

• Annual Gifting: Give up to $18,000 per recipient per year (2024) without using any of your lifetime exemption.
• Irrevocable Life Insurance Trust (ILIT): Removes life insurance proceeds from your taxable estate.
• Spousal Portability: A surviving spouse can use the deceased spouse's unused exemption by filing Form 706, effectively doubling the couple's exemption.
• Charitable Remainder Trusts: Provide income during your lifetime and reduce the taxable estate with a charitable deduction.
• Grantor Retained Annuity Trusts (GRATs): Transfer asset appreciation out of your estate at minimal gift tax cost.

Frequently Asked Questions

What is the federal estate tax?

The federal estate tax is a tax on the transfer of property at death. It applies to estates exceeding the applicable exemption amount ($13.61 million for 2024, $13.99 million for 2025). Tax rates range from 18% to 40%.

What is the estate tax exemption for 2024 and 2025?

The federal estate tax exemption is $13.61 million for 2024 and $13.99 million for 2025 per individual. Married couples can effectively shelter up to double this amount through spousal portability.

What is the unlimited marital deduction?

The unlimited marital deduction allows you to transfer any amount of assets to a surviving U.S. citizen spouse without incurring estate tax. This defers the tax until the surviving spouse's death.

How do prior taxable gifts affect estate tax?

Lifetime taxable gifts (amounts exceeding the $18,000 annual exclusion per recipient for 2024) are added to the taxable estate to determine the tentative tax base. The unified credit offsets both gift and estate taxes up to the exemption amount.

What happens to the estate tax exemption in 2026?

Without Congressional action, the exemption is projected to drop to approximately $7 million in 2026 when the Tax Cuts and Jobs Act provisions expire. This could significantly increase the number of taxable estates.