Estate Tax Calculator
How It Works
The federal estate tax is a tax on the transfer of property at death. It applies to the total value of a deceased person's assets — including real estate, investments, business interests, life insurance proceeds, and personal property — minus allowable deductions. The estate tax is paid by the estate itself before assets are distributed to beneficiaries, and it is separate from any income tax or inheritance tax that beneficiaries may owe.
The most significant factor in estate tax planning is the federal estate tax exemption. For 2026, the exemption is $13,990,000 per person, assuming the Tax Cuts and Jobs Act provisions are extended. This means estates valued below the exemption amount owe no federal estate tax. Only the value exceeding the exemption is subject to graduated tax rates ranging from 18% to 40%. Due to this high exemption, fewer than 0.1% of estates owe any federal estate tax.
Married couples benefit from the unlimited marital deduction, which allows a surviving spouse to inherit the entire estate tax-free regardless of the amount. Additionally, the portability provision allows a surviving spouse to use any unused portion of the deceased spouse's exemption, effectively doubling the couple's combined exemption to $27,980,000. To claim portability, the executor must file an estate tax return (Form 706) even if no tax is owed.
Several deductions reduce the taxable estate. Debts owed by the deceased, funeral expenses, and estate administration costs (attorney fees, executor fees, appraisal costs) are fully deductible. Charitable bequests to qualified organizations are also fully deductible with no cap. These deductions are subtracted from the gross estate before the exemption is applied, further reducing or eliminating the tax liability.
Estate tax rates are graduated, starting at 18% on the first $10,000 of taxable estate above the exemption and rising to 40% on amounts exceeding $1,000,000 above the exemption. The effective estate tax rate is always lower than the top marginal rate because of the graduated structure. Estates just above the exemption threshold face relatively modest tax rates, while very large estates approach the 40% marginal rate on the bulk of their taxable value.
Formula Breakdown
Federal estate tax is calculated using graduated marginal brackets: 1. Taxable Estate = Gross Estate - Debts - Expenses - Charitable Bequests (If married, unlimited marital deduction applies — surviving spouse inherits tax-free) 2. Estate Tax Base = Taxable Estate - Exemption ($13,990,000 per person for 2026) 3. Apply graduated estate tax brackets to amount over exemption: - 18% on first $10,000 - 20% on $10,001 - $20,000 - 22% on $20,001 - $40,000 - 24% on $40,001 - $60,000 - 26% on $60,001 - $80,000 - 28% on $80,001 - $100,000 - 30% on $100,001 - $150,000 - 32% on $150,001 - $250,000 - 34% on $250,001 - $500,000 - 37% on $500,001 - $750,000 - 39% on $750,001 - $1,000,000 - 40% on amounts over $1,000,000 4. Effective Rate = Estate Tax / Gross Estate x 100 Example: Single, $20,000,000 gross estate, $100,000 debts, no charitable: - Taxable estate = $19,900,000 - Over exemption = $19,900,000 - $13,990,000 = $5,910,000 - Estate tax = $2,325,800 (graduated rates, with most taxed at 40%) - Effective rate = 11.6%
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