Estate Tax Calculator: Federal Estate Tax Estimator Updated Feb 2026
An estate tax calculator helps estimate potential federal estate tax liability and plan strategies to minimize taxes on wealth transfers. While most estates won't owe federal tax due to high exemption amounts, proper planning is essential for high-net-worth individuals.
Key Takeaways
- 2024 exemption: $13.61 million per person ($27.22 million for couples)
- 2025 sunset: Exemption drops to ~$5 million (adjusted for inflation)
- Tax rates: 18% to 40% on amounts above exemption
- Portability: Unused exemption transfers to surviving spouse
- Gift tax unified: Same exemption applies to lifetime gifts
- State taxes: Some states have separate, lower exemptions
- Taxable estate value
- Estimated federal estate tax
- Effective tax rate calculation
- State estate tax estimates
- Planning opportunity alerts
What is Estate Tax?
The federal estate tax is a transfer tax on the total value of assets owned at death. According to IRS regulations:
- Death tax: Applied to estate of deceased person
- Transfer tax: On right to transfer assets to heirs
- Gross estate: Everything owned at death (before deductions)
- Taxable estate: Gross estate minus deductions
- Progressive rates: Higher rates on larger estates
Important distinction: Estate tax is paid by the estate before distribution. Inheritance tax (imposed by some states) is paid by beneficiaries who receive assets.
Estate Tax Exemption
The exemption amount determines how much wealth can transfer tax-free:
| Year | Individual Exemption | Married Couple |
|---|---|---|
| 2017 | $5.49 million | $10.98 million |
| 2018 | $11.18 million | $22.36 million |
| 2020 | $11.58 million | $23.16 million |
| 2021 | $11.70 million | $23.40 million |
| 2022 | $12.06 million | $24.12 million |
| 2023 | $12.92 million | $25.84 million |
| 2024 | $13.61 million | $27.22 million |
| 2026+ | ~$5 million* | ~$10 million* |
* Sunset of 2017 tax law - adjusted for inflation
Estate Tax Rates
Federal estate tax uses progressive rates from 18% to 40%:
| Taxable Amount Above Exemption | Tax Rate | Tax on Lower Amount |
|---|---|---|
| $0 - $10,000 | 18% | $0 |
| $10,001 - $20,000 | 20% | $1,800 |
| $20,001 - $40,000 | 22% | $3,800 |
| $40,001 - $60,000 | 24% | $8,200 |
| $60,001 - $80,000 | 26% | $13,000 |
| $80,001 - $100,000 | 28% | $18,200 |
| $100,001 - $150,000 | 30% | $23,800 |
| $150,001 - $250,000 | 32% | $38,800 |
| $250,001 - $500,000 | 34% | $70,800 |
| $500,001 - $750,000 | 37% | $155,800 |
| $750,001 - $1,000,000 | 39% | $248,300 |
| Over $1,000,000 | 40% | $345,800 |
The "40% Cliff"
Unlike income tax brackets where rates climb slowly, Estate Tax hits hard and fast.
Once your estate exceeds the exemption by $1 Million, you are paying a flat 40% tax on every additional dollar. This is one of the highest tax rates in the US code.
Strategic Move: "Double Exemption" (Portability)
If your spouse dies and doesn't use their full $13.61M exemption, they can transfer the leftover amount to you.
This effectively doubles a couple's protection to over $27 Million. But you MUST file an estate tax return (Form 706) to claim it.
The State Tax Trap
You might owe $0 Federal Tax but still owe massive State Taxes.
Example: In Massachusetts or Oregon, the exemption is only $1 Million or $2 Million. An estate worth $5 Million pays $0 to the IRS but could owe $400,000+ to the state.
Wealth Drain: Annual Gifting
The easiest way to lower your estate tax? Give it away while you're alive.
You can gift $18,000 per person, per year (2024) completely tax-free. A couple with 3 kids and 3 grandkids can remove $216,000/year from their taxable estate tax-free.
Essentially, estates above the exemption pay a flat 40% rate on amounts over the exemption threshold once the taxable estate exceeds $1 million above the exemption.
Calculator Formula
Gross Estate = Sum of all assets at fair market value Taxable Estate = Gross Estate - Deductions Estate Tax = (Taxable Estate - Exemption) × Tax Rate Note: Only amounts ABOVE the exemption are taxed. Example: $15 million estate in 2024: Taxable Estate = $15,000,000 Less: Exemption = $13,610,000 Taxable Amount = $1,390,000 Estate Tax = $1,390,000 × 40% = $556,000
How to Use This Calculator
- Enter total assets: Include all property, investments, business interests
- Input life insurance: Include proceeds if you own the policy
- Add prior taxable gifts: Lifetime gifts above annual exclusion
- Select year: 2024 or future years for sunset planning
- Marital status: Individual or portability election
- State selection: For state estate tax estimates
Example Calculation
Scenario: Single individual, 2024
- Home: $1.5 million
- Investment accounts: $3 million
- Retirement accounts: $2 million
- Life insurance: $1 million
- Business interest: $8 million
- Personal property: $500k
Total Gross Estate: $16 million
Deductions:
- Debts: $200k
- Funeral expenses: $20k
- Administrative costs: $50k
Total Deductions: $270k
Results:
Taxable Estate: $16M - $270k = $15.73 million
Less Exemption: $13.61 million
Taxable Amount: $2.12 million
Estate Tax: $2.12M × 40% = $848,000
Assets Included in Estate
The gross estate includes more than you might expect:
Always Included:
- Cash and bank accounts
- Stocks, bonds, mutual funds
- Real estate (anywhere in world)
- Business interests and ownership
- Retirement accounts (401k, IRA)
- Life insurance proceeds (if owned by decedent)
- Personal property (cars, jewelry, art)
- Certain trust assets
Special Rules:
- Joint property: Full value included unless spouse is joint tenant
- Gifts within 3 years: Certain gifts brought back into estate
- Retained interests: Assets given away but with strings attached
- Powers of appointment: Assets you can direct
Estate Tax Deductions
Several deductions reduce the taxable estate:
| Deduction | Description | 2024 Limits |
|---|---|---|
| Marital Deduction | Unlimited transfers to surviving US citizen spouse | Unlimited |
| Charitable Deduction | Bequests to qualified charities | Unlimited |
| Mortgages & Debts | Valid claims against estate | Actual amounts |
| Funeral Expenses | Funeral and burial costs | Reasonable amounts |
| Administrative Costs | Executor fees, legal costs, appraisals | Actual amounts |
| Losses | Casualty losses during administration | Actual amounts |
Portability of Exemption
Portability allows unused estate tax exemption to transfer to the surviving spouse:
- Election required: Must file Form 706 even if no tax due
- Timely filing: Due 9 months after death (with extensions)
- DSUE amount: Deceased Spousal Unused Exclusion
- Remarriage complications: Portability limited in subsequent marriages
- Not automatic: Must affirmatively elect on return
Portability Example
First spouse dies: Estate worth $8 million
Exemption used: $8 million
Unused exemption: $13.61M - $8M = $5.61 million (DSUE)
Surviving spouse later dies: Estate worth $20 million
Own exemption: $13.61 million
Portability from spouse: $5.61 million
Total exemption: $19.22 million
Taxable estate: $20M - $19.22M = $780,000
Estate tax: $780,000 × 40% = $312,000
Without portability election, estate tax would have been $2.556 million
Gift Tax Connection
The estate and gift tax are unified:
- Same exemption: Lifetime gifts reduce estate exemption
- Annual exclusion: $18,000 per person (2024) doesn't count
- Gift splitting: Married couples can give $36,000 per recipient
- Future interest gifts: Don't qualify for annual exclusion
- 529 plans: Can front-load 5 years of exclusions
State Estate Taxes
Several states impose additional estate or inheritance taxes:
States with Estate Taxes (2024)
| State | Exemption | Top Rate |
|---|---|---|
| Connecticut | $13.61 million | 12% |
| Hawaii | $5.49 million | 20% |
| Illinois | $4 million | 16% |
| Maine | $6.41 million | 12% |
| Maryland | $5 million | 16% |
| Massachusetts | $2 million | 16% |
| Minnesota | $3 million | 16% |
| New York | $6.94 million | 16% |
| Oregon | $1 million | 16% |
| Rhode Island | $1.77 million | 16% |
| Vermont | $5 million | 16% |
| Washington | $2.19 million | 20% |
Inheritance Tax States (Tax Paid by Beneficiary)
Iowa, Kentucky, Maryland (both), Nebraska, New Jersey, Pennsylvania
Planning Strategies
Strategies to minimize estate tax:
Lifetime Gifting
- Maximize annual exclusions ($18,000 per person)
- Use large exemption before 2026 sunset
- Front-load 529 plans (5-year election)
- Pay medical/educational expenses directly (unlimited)
Trust Strategies
- Bypass trust: Preserves first spouse's exemption
- ILIT: Irrevocable Life Insurance Trust removes proceeds from estate
- GRAT: Grantor Retained Annuity Trust transfers appreciation
- QPRT: Qualified Personal Residence Trust for home
- Charitable trust: CRT or CLT for philanthropy
Other Strategies
- Family limited partnerships (valuation discounts)
- Intrafamily loans at AFR rates
- Installment sales to grantor trusts
- Charitable bequests (unlimited deduction)
- Marital deduction planning
Estate & Inheritance Tax Around the World
The United States federal estate tax is one of many wealth-transfer tax systems globally. Approaches vary widely — some countries levy tax on the estate itself, others on individual beneficiaries (inheritance tax), and some have abolished such taxes entirely.
| Country | Tax Type | Threshold / Exemption | Top Rate | Key Rules |
|---|---|---|---|---|
| United States | Federal Estate Tax (Form 706) | $13.61M per individual (2024); $27.22M per couple with portability | 40% | Progressive rates 18%–40% above exemption; executor elects portability on timely-filed Form 706; TCJA exemption scheduled to sunset to ~$7M (adjusted) after 2025 unless extended; 16 states + D.C. also levy state estate or inheritance tax; step-up in cost basis at death for capital assets |
| United Kingdom | Inheritance Tax (IHT) | £325,000 Nil-Rate Band + £175,000 Residence Nil-Rate Band (RNRB) for main home passed to direct descendants | 40% | 8% reduced rate when 10%+ of estate left to charity; 7-year rule for lifetime gifts (potentially exempt transfers); Agricultural/Business Relief up to 100%; IHT400 return required; spouse/civil partner transfers fully exempt; domicile and deemed domicile rules affect non-UK nationals |
| Australia | No estate or inheritance tax (abolished 1979) | N/A | 0% | Capital Gains Tax (CGT) applies to inherited assets when later sold by beneficiaries; main residence exemption extends to inherited property for 2-year transitional period; superannuation death benefits taxed differently based on recipient (dependant vs non-dependant); no death duties at federal or state level since 1981 |
| Canada | No estate/inheritance tax (abolished 1972); "deemed disposition" triggers capital gains | N/A for estate tax; primary residence fully exempt from CGT | ~27% effective (50% of gains included at marginal rate) | Assets deemed disposed at fair market value at death; survivor spouse rollover available (defer CGT until second death); probate fees (estate administration tax) levied by provinces; Ontario: 1.5% over $50,000; life insurance proceeds pass outside estate |
| Germany | Inheritance Tax (Erbschaftsteuer) & Gift Tax (Schenkungsteuer) | €500,000 per spouse; €400,000 per child; refreshes every 10 years (gifting) | 50% (Tax Class III, distant relatives/non-family) | Tax Class I (spouses, children): 7–30%; Tax Class II (siblings, in-laws): 15–43%; business assets: 85–100% exemption if kept for 5–7 years; family homes transferred to spouse or children fully exempt if occupied after transfer; Germany is federal — no state-level variation |
| Japan | Inheritance Tax (Sozoku-zei) | ¥30M basic allowance + £6M per heir; applied to taxable estate after deduction | 55% (estates over ¥600M) | Progressive rates from 10% to 55%; 2-year statute of limitations for gift look-back; non-resident heirs owe Japanese inheritance tax on Japanese-situated assets; spousal deduction: up to ¥160M or 50% of estate (whichever larger); Japan has among the highest inheritance tax burden for large estates globally |
Estate and inheritance tax laws change frequently. Thresholds, rates, and rules listed reflect publicly available information as of early 2025. Always consult a qualified estate planning attorney or cross-border tax specialist for advice specific to your situation.
Frequently Asked Questions
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