Estate Tax Calculator

The federal estate tax is levied on the transfer of a deceased person's assets to their heirs. It applies to the total value of the estate, including real estate, investments, bank accounts, business interests, and life insurance proceeds. The estate's executor must file IRS Form 706 and pay any tax due within nine months of death. The tax is assessed on the estate's value above the applicable exemption amount, with a top marginal rate of 40% on the taxable portion.

For 2024, the federal estate tax exemption is $13.61 million per individual, meaning estates valued below this threshold owe no federal estate tax. Married couples can effectively shield up to $27.22 million by using portability, which allows a surviving spouse to use any unused portion of the deceased spouse's exemption. This historically high exemption is scheduled to sunset after 2025, potentially dropping to approximately $7 million per person unless Congress acts to extend it.

Several estate planning tools can help reduce potential estate tax liability. Annual gift exclusions allow you to give up to $18,000 per recipient in 2024 without affecting your lifetime exemption. Irrevocable life insurance trusts (ILITs) remove life insurance proceeds from your taxable estate. Charitable remainder trusts and donor-advised funds provide tax-efficient ways to leave assets to charity. The unlimited marital deduction allows spouses to transfer any amount to each other without estate tax consequences.

In addition to the federal estate tax, about a dozen states impose their own estate taxes, often with much lower exemption thresholds. States like Oregon and Massachusetts tax estates above $1 million, significantly lower than the federal exemption. Six states also levy inheritance taxes, which are paid by the heirs rather than the estate. Maryland is the only state that imposes both an estate tax and an inheritance tax. Residents of these states need to plan for both federal and state-level taxation.