Will your estate owe federal tax?
Almost no one does. The first $13.61 million of an estate is exempt in 2024, so fewer than one estate in a thousand owes a dollar of federal estate tax. Enter your numbers to see exactly where you stand and what, if anything, would be due.
The estate
Everything owned: real estate, investments, bank accounts, business interests and life insurance proceeds.
Mortgages, loans, final expenses and other amounts the estate must pay.
Charitable gifts, the unlimited marital deduction and other amounts that lower the taxable estate.
About a dozen states levy their own estate tax with far lower thresholds. This adds a rough state note below.
What your estate faces
How the estate splits
Exempt, taxed and kept, and tax
Estate tax scorecard
Estate tax at different estate sizes
Using your current debts and deductions, here is what the federal tax would be at a range of gross estate values. The exemption does the heavy lifting.
| Gross estate | Taxable estate | Over exemption | Federal tax | Net to heirs |
|---|
Estate tax, explained
How the Federal Estate Tax Works
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.
2024 Estate Tax Exemption Amount
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.
Estate Planning Strategies to Reduce Taxes
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.
State Estate and Inheritance Taxes
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.
Common questions
What is the federal estate tax exemption for 2024?
The 2024 federal estate tax exemption is $13.61 million per individual ($27.22 million for married couples). Estates valued below this threshold owe no federal estate tax. This exemption is set to decrease to approximately $7 million in 2026.
What is the federal estate tax rate?
The federal estate tax rate is 40% on the taxable estate amount exceeding the exemption. While there are technically graduated rates from 18% to 40%, for estates large enough to be taxable, the effective marginal rate is 40%.
Do most people pay estate tax?
No. With the $13.61 million exemption, fewer than 0.1% of estates owe federal estate tax. However, about a dozen states have their own estate or inheritance taxes with lower exemption thresholds, often starting at $1-5 million.
How can I reduce estate taxes?
Common strategies include annual gift exclusions ($18,000 per recipient in 2024), irrevocable trusts, charitable giving, life insurance trusts, and the unlimited marital deduction for transfers to a surviving spouse.
Estimates for planning only, not tax or legal advice. This tool applies the 2024 federal exemption of $13,610,000 and the top 40% rate. The real federal schedule is graduated from 18% to 40%, states impose their own estate and inheritance taxes, and the exemption is scheduled to fall after 2025. Consult an estate attorney or tax advisor before acting.