What is Federal Estate Tax?
Estate tax is a tax on the transfer of property upon death. It is paid by the estate, not by the heirs. In recent years, the federal estate tax exemption has been very high, meaning most families do not owe any estate tax.
2025–2026 Key Numbers (Approximate)
- Federal Exemption: Approximately $13.99 million per person in 2025 (rising slightly in 2026)
- Top Tax Rate: 40%
- Marital Deduction: Assets left to a surviving U.S. citizen spouse are generally not subject to estate tax
How This Calculator Works
Gross Estate = Sum of all assets at fair market value
Taxable Estate = Gross Estate − Debts − Funeral/Admin Expenses − Charitable Gifts − Marital Deduction − Lifetime Gifts
Estate Tax = Tax on (Taxable Estate − Exemption) at applicable rates
Common Ways to Reduce Estate Tax
- Make lifetime gifts (using annual exclusion + lifetime exemption)
- Leave assets to spouse (unlimited marital deduction)
- Donate to charity
- Use irrevocable trusts (Irrevocable Life Insurance Trust, etc.)
- Take advantage of valuation discounts for family businesses or real estate
Important Notes
- This is a simplified estimator. It does not include state estate/inheritance taxes.
- The high federal exemption means very few estates currently pay federal estate tax.
- Estate tax rules can change with new legislation. Always consult an estate planning attorney for personalized advice.