TAX
Estate Tax Calculator - Federal Estate Tax Estimate
By Worldtickers ·
Estimate your federal estate tax liability based on estate value and the applicable exemption amount and 40% flat rate.
This estate tax tool focuses on estimate your federal estate tax liability based on estate value and the applicable exemption amount and 40% flat rate. Use it to estimate tax exposure, deductions, rates, payments, and after-tax outcomes, then test how income, gains, location, filing choices, or timing may change the final estimate.
Calculator
Estate Tax Calculator
Estimate federal estate tax using the 2026 exemption.
What Is Estate Tax?
The federal estate tax is a tax imposed on the transfer of a person's estate at death. It is calculated based on the total fair market value of all assets owned by the deceased at the time of death — including real estate, financial accounts, business interests, retirement funds, and personal property — minus allowable deductions such as debts, funeral expenses, and charitable bequests.
Only the portion of the estate that exceeds the federal exemption amount is subject to tax. The exemption for 2026 is approximately $7 million per individual, or roughly $14 million for a married couple using portability. The tax rate on the taxable portion is a flat 40%, which is the maximum rate that has applied since 2013.
It is important to distinguish estate tax from inheritance tax. Estate tax is paid by the estate before assets are distributed to heirs. Inheritance tax, which only a handful of US states impose, is paid by the recipient and varies by the heir's relationship to the deceased. Most Americans will not owe either tax, but those with substantial assets should plan accordingly, especially as the TCJA exemption is expected to revert to lower levels after 2025.
How to Use This Calculator
Enter the total value of the estate at the time of death, including all real estate, financial accounts, business interests, retirement accounts, life insurance proceeds (where the deceased owned the policy), and personal property of significant value.
Then enter the total allowable deductions: outstanding debts and mortgages, funeral and administrative expenses, and charitable bequests. If the estate is passing to a surviving spouse, the unlimited marital deduction may apply to reduce the taxable estate further.
The calculator subtracts deductions from the gross estate to determine the taxable estate, applies the current exemption amount, and calculates the 40% tax on any remaining excess. The result shows the estimated federal estate tax liability, the effective tax rate as a percentage of the gross estate, and the amount that would pass to heirs after tax.
Formula
The federal estate tax is calculated using a straightforward formula:
Taxable Estate = Gross Estate − Deductions
Estate Tax = max(0, Taxable Estate − Exemption) × 40%
The gross estate includes all assets at fair market value at the date of death (or the alternate valuation date, six months later, if elected). Deductions include debts, funeral expenses, estate administration costs, qualifying charitable transfers, and the unlimited marital deduction for assets passing to a US citizen spouse. The exemption amount for 2026 is approximately $7 million per individual.
Unlike the graduated income tax, the estate tax operates as a flat 40% on the taxable amount above the exemption. There are no brackets — once the exemption is exceeded, every dollar of excess is taxed at 40%.
Examples
Example 1: Below Exemption
A single person dies with an estate valued at $5 million and $500,000 in debts and funeral expenses. The taxable estate is $4.5 million, which is below the $7 million exemption. Federal estate tax owed: $0. The full $4.5 million (after debts) passes to heirs free of federal estate tax.
Example 2: Above Exemption
A single person dies with a $12 million estate and $200,000 in deductions. The taxable estate is $11.8 million. After subtracting the $7 million exemption, $4.8 million is taxable at 40%. Estate tax owed: approximately $1.92 million. Heirs receive roughly $9.88 million after tax and deductions.
Example 3: Married Couple with Portability
A married couple has a combined estate of $20 million. The first spouse dies with a $10 million estate and leaves everything to the surviving spouse (unlimited marital deduction — no tax at first death). The surviving spouse then dies with the full $20 million. Using portability, the combined exemption is approximately $14 million. Taxable estate: $6 million. Tax owed: approximately $2.4 million.
Tips
Plan Before the TCJA Sunset
The doubled estate tax exemptions from the Tax Cuts and Jobs Act are set to revert after 2025, roughly halving the amount each person can shelter. If your estate is near or above the current exemption, work with an estate planning attorney now to take advantage of strategies like irrevocable trusts and advanced gifting before the lower thresholds take effect.
Use the Annual Gift Exclusion
Each person can give up to $18,000 per recipient per year (2026 amount, indexed for inflation) without filing a gift tax return or reducing their lifetime exemption. Married couples can jointly give $36,000 per recipient. This is one of the simplest and most effective ways to reduce a taxable estate over time.
Consider Irrevocable Trusts
Irrevocable trusts — such as GRATs, IDGTs, and SLATs — remove assets from your taxable estate while potentially allowing you to retain some economic benefit. These structures are especially valuable for holding appreciating assets like closely held business interests or growth stocks.
Don't Forget State Estate Taxes
Some states impose their own estate or inheritance taxes with exemption amounts far lower than the federal level — in some cases as low as $1 million. Check whether your state imposes an additional estate tax, as your total tax burden could be significantly higher than the federal amount alone.
FAQ
What is the federal estate tax exemption for 2026?
For 2026, the federal estate tax exemption is approximately $7 million per individual (roughly $14 million for married couples using portability). Only the portion of an estate exceeding this exemption is subject to the 40% federal estate tax. These amounts are inflation-adjusted annually.
Does every estate pay estate tax?
No. The vast majority of estates do not owe any federal estate tax because the exemption amount is high enough to cover most people's total assets. Only estates valued above the exemption threshold owe tax, and only on the excess above that threshold. In 2026, less than 0.2% of estates are expected to be taxable.
Is estate tax the same as inheritance tax?
No. Federal estate tax is paid by the estate before assets are distributed to heirs. Inheritance tax, which only a handful of states impose, is paid by the recipient. If your state has an inheritance tax, your heirs may owe additional tax depending on their relationship to you. Six states currently impose some form of inheritance tax.
What happens when the exemption sunsets after 2025?
The Tax Cuts and Jobs Act (TCJA) doubled estate tax exemptions, but these provisions are set to sunset at the end of 2025. Starting in 2026, the exemption is projected to revert to approximately $7 million per individual (inflation-adjusted). This means more estates may become taxable, and planning strategies that were previously unnecessary may become valuable.
Can married couples combine their exemptions?
Yes. Through a concept called portability, a surviving spouse can use any unused portion of the deceased spouse's estate tax exemption. This effectively allows married couples to shelter roughly double the individual exemption amount. However, portability must be elected on a timely filed estate tax return (Form 706), even if no tax is owed.
What assets are included in the taxable estate?
The taxable estate includes virtually all assets owned at death: real estate, bank accounts, investment accounts, retirement accounts, business interests, life insurance proceeds (if the decedent owned the policy), and personal property. Certain deductions — such as debts, funeral expenses, charitable bequests, and the marital deduction for assets left to a spouse — can reduce the taxable estate.
Are life insurance proceeds subject to estate tax?
If the deceased owned the life insurance policy (or had incidents of ownership), the death benefit is included in the taxable estate. To avoid this, many high-net-worth individuals transfer ownership of life insurance policies to an irrevocable life insurance trust (ILIT) before death, removing the proceeds from the taxable estate.
What planning strategies can reduce estate tax?
Common strategies include annual gifting (up to the annual exclusion amount per recipient per year), funding irrevocable trusts (such as GRATs, IDGTs, or SLATs), charitable giving through donor-advised funds or private foundations, and using the marital deduction to pass assets to a surviving spouse. A qualified estate planning attorney can design a strategy tailored to your situation.