🏠 Estate Assets & Values
Total fair market value of all assets
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Mortgages, loans, credit card debt
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Attorney fees, executor, court, funeral
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Qualifying charitable deductions (unlimited)
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💒 Marital & Gift Deductions
Transfers to surviving U.S. citizen spouse (unlimited)
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Gifts exceeding annual exclusion ($19,000/recipient/year)
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Surviving spouses can inherit unused exemption
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12 states + DC have their own estate tax
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Federal Estate Tax Due
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⚠️ Disclaimer: This calculator provides estimates based on simplified federal estate tax law as of 2026. Actual estate tax depends on many factors including specific asset valuations, state laws, trust structures, and deduction eligibility. Always consult a qualified estate planning attorney and CPA for estate planning decisions.
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Sources & Methodology
Estate tax calculations based on Internal Revenue Code Sections 2001-2210, IRS Form 706 instructions, and the One Big Beautiful Bill Act (OBBBA) signed July 4, 2025, effective January 1, 2026.
IRS.gov — Estate Tax Overview & Form 706
Official IRS guidance on federal estate tax, including the unified credit, applicable exclusion amounts, portability election procedures, and Form 706 filing requirements for 2026.
One Big Beautiful Bill Act — Estate Tax Changes (Intuit Tax Pro Center)
Authoritative analysis of the OBBBA Section 70106 estate tax provisions, confirming the $15 million exemption effective January 1, 2026 and the permanent elimination of the TCJA sunset provision.
IRS Revenue Procedure 2025-19 — 2026 Tax Inflation Adjustments
Official IRS announcement confirming 2026 tax figures including the $15 million estate tax exemption, $19,000 annual gift tax exclusion, and unified credit amounts.
Methodology (Simplified Federal Estate Tax Calculation):
Adjusted Gross Estate = Gross Estate - Debts - Admin Expenses Taxable Estate = Adjusted Gross Estate - Marital Deduction - Charitable Deduction Tentative Tax Base = Taxable Estate + Lifetime Taxable Gifts Tentative Tax = Unified Rate Schedule applied to Tax Base Applicable Exclusion = $15,000,000 + DSUE (portability) Unified Credit = Tax on Applicable Exclusion Estate Tax Due = max(0, Tentative Tax - Unified Credit - Gift Tax Paid) State estate tax estimated separately using each state's applicable exemption and rate schedule. This is a simplified calculation; actual Form 706 uses the full IRC Section 2001(c) unified rate table.
Adjusted Gross Estate = Gross Estate - Debts - Admin Expenses Taxable Estate = Adjusted Gross Estate - Marital Deduction - Charitable Deduction Tentative Tax Base = Taxable Estate + Lifetime Taxable Gifts Tentative Tax = Unified Rate Schedule applied to Tax Base Applicable Exclusion = $15,000,000 + DSUE (portability) Unified Credit = Tax on Applicable Exclusion Estate Tax Due = max(0, Tentative Tax - Unified Credit - Gift Tax Paid) State estate tax estimated separately using each state's applicable exemption and rate schedule. This is a simplified calculation; actual Form 706 uses the full IRC Section 2001(c) unified rate table.
Last reviewed: April 2026
Federal Estate Tax 2026: Complete Guide to the New $15 Million Exemption
The estate tax landscape changed dramatically on July 4, 2025 when the One Big Beautiful Bill Act (OBBBA) was signed into law. This legislation permanently raised the federal estate, gift, and generation-skipping transfer tax exemption to $15 million per individual ($30 million for married couples) starting January 1, 2026. The feared "tax cliff" — which would have cut the exemption to approximately $7 million under the expiring TCJA — was permanently eliminated. This guide explains exactly how the 2026 federal estate tax works, who is affected, and the planning strategies available to minimize estate taxes.
The 2026 Estate Tax: Who It Actually Affects
With a $15 million individual exemption, the vast majority of Americans owe zero federal estate tax. Only estates exceeding $15 million (individual) or $30 million (married couple with portability) are subject to the 40% tax on the excess. The IRS estimates that fewer than 0.2% of all deaths result in any federal estate tax liability under the current exemption levels. However, 12 states and Washington D.C. impose their own estate taxes with much lower exemption thresholds, catching estates well below the federal level.
Federal Estate Tax = 40% x max(0, Taxable Estate - $15,000,000)
Simplified calculation. The actual calculation uses the unified rate schedule (18%-40%) and applies a unified credit equal to the tax that would be owed on the $15 million exemption. The effective rate approaches 40% for large taxable estates.
Estate Tax Calculation: Step-by-Step Waterfall
| Step | Item | Example: $20M Estate, Married |
|---|---|---|
| 1 | Gross Estate | $20,000,000 |
| 2 | Less: Debts & Liabilities | - $800,000 |
| 3 | Less: Admin & Funeral Expenses | - $200,000 |
| 4 | = Adjusted Gross Estate | $19,000,000 |
| 5 | Less: Marital Deduction (to spouse) | - $4,000,000 |
| 6 | Less: Charitable Bequest | - $500,000 |
| 7 | = Taxable Estate | $14,500,000 |
| 8 | Plus: Prior Taxable Lifetime Gifts | + $0 |
| 9 | = Tentative Tax Base | $14,500,000 |
| 10 | Less: Applicable Exclusion ($15M) | - $15,000,000 |
| 11 | = Taxable Amount Above Exemption | $0 (below exemption) |
| 12 | Federal Estate Tax at 40% | $0 |
Portability: The $30 Million Married Couple Exemption
The portability election allows a surviving spouse to use any portion of the deceased spouse's unused federal estate tax exemption. This effectively gives married couples a combined $30 million exemption in 2026, but only if portability is properly elected.
⚠️ Critical planning point: Portability must be elected by filing Form 706 within 9 months of the deceased spouse's death (plus 6-month extension if applied for). The IRS Revenue Procedure 2022-32 allows a simplified late election within 5 years. Failure to elect portability forfeits the deceased spouse's unused exemption permanently, potentially costing $6 million in tax at the surviving spouse's death (40% of the $15 million unused exemption).
The 12 States with Their Own Estate Tax in 2026
| State | Exemption (2026) | Top Rate | Key Features |
|---|---|---|---|
| Massachusetts | $2,000,000 | 16% | Cliff tax: estates 5% above exemption lose exemption |
| Oregon | $1,000,000 | 16% | Lowest exemption in U.S. — most estates affected |
| Rhode Island | $1,774,583 | 16% | Indexed for inflation |
| Washington State | $2,193,000 | 20% | New 2025 legislation raised rates significantly |
| New York | $7,160,000 | 16% | Cliff tax + no portability + 3-year gift clawback |
| Minnesota | $3,000,000 | 16% | Indexed for inflation |
| Illinois | $4,000,000 | 16% | Not indexed; inflation erodes exemption value over time |
| Maryland | $5,000,000 | 16% | Only state with both estate AND inheritance tax |
| Vermont | $5,000,000 | 16% | |
| Maine | $6,800,000 | 12% | Indexed for inflation |
| Hawaii | $5,490,000 | 20% | |
| Connecticut | $13,610,000 | 12% | Exemption matches 2022 federal level |
Top Estate Tax Reduction Strategies in 2026
Even with the generous $15 million federal exemption, estates above this threshold can use several legal strategies to minimize taxes. For state estate taxes with lower exemptions, these strategies become relevant at much lower estate values.
- Annual exclusion gifting ($19,000/recipient/year): The most straightforward strategy. $19,000 per recipient, any number of recipients, no gift tax return required. A married couple can give $38,000 per recipient. Over 20 years to 5 beneficiaries: $3.8 million removed from the estate tax-free.
- Irrevocable Life Insurance Trust (ILIT): Removes life insurance proceeds from the taxable estate. A $5 million policy owned outside the estate saves $2 million in estate tax (40% rate) at no income tax cost to beneficiaries (life insurance proceeds are income tax-free).
- Charitable Remainder Trust (CRT): You transfer appreciated assets to a CRT, receive income for life or a period of years, and receive a charitable deduction for the present value of the charity's remainder interest. Avoids capital gains on appreciated assets and reduces estate tax.
- Grantor Retained Annuity Trust (GRAT): Transfers future asset appreciation to heirs without gift or estate tax. Works best for assets expected to appreciate significantly (startup equity, real estate, closely held business). Zero-out GRATs take advantage of the IRS hurdle rate.
- 529 Superfunding: You can front-load 5 years of annual exclusion gifts into a 529 plan ($95,000 per individual, $190,000 per couple per beneficiary) immediately, removing the full amount from your estate while it grows tax-free for education.
- Qualified Personal Residence Trust (QPRT): Transfers your home to heirs at a discounted gift tax value while you retain the right to live in it for a set term. The longer the term, the larger the discount to gift tax value.
- Dynasty Trust: With the expanded GSTT exemption ($15 million per person), dynasty trusts can shelter multi-generational wealth from estate tax at every generation. Properly funded, a dynasty trust can hold assets for 100+ years without estate tax at each death.
What Assets Are Included in the Gross Estate?
The gross estate includes everything you own or control at death at fair market value. Common assets that are often overlooked include: the death benefit of life insurance policies you own, your portion of jointly held property, interests in family LLCs or partnerships (potentially subject to valuation discounts), retirement accounts (IRAs, 401k — subject to income tax when withdrawn by beneficiaries), annuities, and anything you transferred in the past 3 years with retained interest. The step-up in cost basis at death for appreciated assets is one of the most valuable planning tools available — assets inherited get a new cost basis equal to the fair market value at date of death.
Frequently Asked Questions
The federal estate tax exemption in 2026 is $15 million per individual, permanently established by the One Big Beautiful Bill Act signed July 4, 2025. Married couples can combine exemptions using portability for a total of $30 million. The exemption is indexed for inflation starting in 2027. Only estates exceeding $15 million are subject to any federal estate tax.
The federal estate tax rate in 2026 is 40% on the portion of the taxable estate exceeding the $15 million exemption. The marginal rate structure starts at 18% for the first $10,000 above the exemption and reaches 40% for amounts over $1 million above the exemption (i.e., estates over $16 million). In practice, large taxable estates pay close to the 40% flat rate on most of the taxable amount.
Signed July 4, 2025, the OBBBA permanently raised the federal estate, gift, and generation-skipping transfer tax exemption to $15 million per person starting January 1, 2026. It eliminated the TCJA sunset provision that would have cut the exemption to approximately $7 million. The new exemption is indexed for inflation beginning 2027 and does not expire — ending the "use it or lose it" pressure that drove estate planning activity in 2024-2025.
Portability allows a surviving spouse to use the deceased spouse's unused federal estate tax exemption. If the first spouse to die has a $5 million estate (using $5 million of their $15 million exemption), the surviving spouse can elect to inherit the remaining $10 million of unused exemption. Added to their own $15 million, the surviving spouse has $25 million total exemption. Portability requires filing Form 706 within 9 months of death (plus extension), even if no tax is owed.
The annual gift tax exclusion for 2026 is $19,000 per recipient. You can give any number of individuals up to $19,000 each in 2026 without gift tax or reducing your lifetime exemption. Married couples can combine for $38,000 per recipient. Annual exclusion gifting is the simplest and most commonly used estate tax reduction strategy for estates above the federal or state threshold.
Twelve states plus D.C. impose estate taxes with lower exemptions than the federal level: Connecticut ($13.61M), Hawaii ($5.49M), Illinois ($4M), Maine ($6.8M), Maryland ($5M), Massachusetts ($2M), Minnesota ($3M), New York ($7.16M), Oregon ($1M), Rhode Island ($1.77M), Vermont ($5M), and Washington State ($2.19M). State estate taxes apply even if you owe zero federal tax. Oregon's $1 million exemption is the most aggressive, catching estates well below any federal threshold.
Estate tax is paid by the estate before assets are distributed to heirs. Inheritance tax is paid by the beneficiary on what they receive, based on their relationship to the deceased. The federal government only has an estate tax. Six states (Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania) impose inheritance taxes. Maryland is the only state with both. Spouses are typically exempt from inheritance tax; direct descendants get preferential rates.
The gift and estate tax share one unified $15 million lifetime exemption. Taxable gifts (amounts exceeding the $19,000 annual exclusion per recipient per year) reduce your remaining estate tax exemption dollar for dollar. If you made $2 million in taxable gifts during your lifetime, your remaining estate tax exemption at death is $13 million. Annual exclusion gifts never count against the exemption. This unified credit system prevents avoidance of estate tax through large pre-death gifts.
Yes, if you own the policy. Life insurance death benefits are included in the taxable estate if you had incidents of ownership (ability to change beneficiaries, cancel the policy, take loans) at death. The most common fix is an Irrevocable Life Insurance Trust (ILIT) — the trust owns the policy, and proceeds are paid to trust beneficiaries outside your taxable estate. A $10 million policy owned by an ILIT saves $4 million in federal estate tax at the 40% rate on an estate above the exemption.
Inherited assets receive a stepped-up cost basis equal to their fair market value on the date of the decedent's death. This means heirs can sell inherited assets immediately with little or no capital gains tax, regardless of the original purchase price. For example, stock bought at $500,000 and worth $5 million at death: the $4.5 million unrealized gain is permanently forgiven for income tax. This step-up makes holding appreciated assets until death often better than gifting them during life (gifts carry over the original basis).
Absolutely yes. Estate planning is far more than minimizing federal estate taxes. Everyone with any assets benefits from: a will (without one, state intestacy law decides who gets your assets), powers of attorney and healthcare directives, beneficiary designations on retirement accounts and insurance, trusts to avoid probate (saves time, privacy, and cost), state estate tax planning if you live in one of the 12 lower-exemption states, guardianship nominations for minor children, and business succession planning. These tools are important regardless of whether your estate is taxable at the federal level.
The GSTT applies to transfers that skip a generation — going directly to grandchildren or great-grandchildren rather than children. The 2026 GSTT rate is 40% and uses the same $15 million exemption as the estate and gift tax. Dynasty trusts funded with GSTT exemption can hold assets for multiple generations without estate tax at each generational level. This is one of the most powerful wealth transfer vehicles for high-net-worth families with the expanded $15 million exemption.
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