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Estimate federal estate tax liability using the current unified credit and marginal rates. See how portability, the marital deduction, and charitable gifts reduce your taxable estate.
The federal estate tax applies to the transfer of assets from a deceased person to their heirs when the taxable estate exceeds the exemption threshold. For 2024, the federal exemption is $13.61 million per individual ($27.22 million for married couples using portability). The estate tax rate on amounts above the exemption starts at 18% and reaches 40% on the largest estates. Assets transferred to a surviving US citizen spouse qualify for the unlimited marital deduction and are not taxed at the first death. Careful estate planning using trusts, annual gifts, charitable giving, and life insurance can significantly reduce or eliminate federal estate tax exposure.
Your taxable estate includes most assets you own at death: real property, bank and investment accounts, retirement accounts (IRAs, 401ks), business interests, vehicles, life insurance death benefits where you were the owner of the policy, and your share of jointly owned property. Assets held in an irrevocable trust you no longer control may be excluded.
Portability allows a surviving spouse to use any unused portion of the deceased spouse's federal exemption. For example, if a spouse dies in 2024 with a $13.61 million exemption but only used $3 million, the surviving spouse can claim the remaining $10.61 million on top of their own exemption. Portability must be elected by filing Form 706 within 9 months of death, even if no estate tax is owed.
12 states and Washington DC currently impose their own estate or inheritance tax with lower exemption thresholds than the federal level. Oregon and Massachusetts have exemptions as low as $1 million. Some states like Maryland also have a separate inheritance tax based on who inherits. This calculator covers only federal estate tax.
Assets inherited at death receive a step-up in cost basis to the fair market value at the date of death. If you inherited stock your parent bought for $10,000 that is now worth $200,000, your cost basis becomes $200,000. You owe no capital gains tax on the appreciation during the decedent's lifetime if you sell at that value.
Under current law, the elevated exemption is scheduled to sunset after 2025, dropping back to approximately $7 million per person (inflation-adjusted). This would significantly expand the number of estates subject to federal tax. Congress could extend the current exemption, but planning for the sunset is prudent for estates between $7 million and $13.99 million.
Have more questions? These calculators provide estimates for educational purposes only. For personalized financial advice, consult with a qualified financial professional. See our disclaimer for more information.