🏦 Estate Assets (Fair Market Value at Death)
All real property owned, at fair market value
Enter real estate value (0 if none).
Brokerage accounts, stocks, bonds, ETFs
Enter investment value (0 if none).
All 401k, IRA, pension values — included in gross estate
Enter retirement value (0 if none).
Included if you own the policy (not if owned by ILIT or employer)
Enter life insurance value (0 if none).
Bank accounts, CDs, personal property, business interests
Enter cash and other assets (0 if none).
Gifts above annual exclusion in prior years (from Form 709)
Enter prior gifts (0 if none).
➖ Deductions
All mortgages, loans, and debts owed at death
Enter debts (0 if none).
Funeral costs, executor fees, attorney fees, probate
Enter expenses (0 if none).
Amounts left to qualified charities — fully deductible
Enter charitable bequests (0 if none).
Unlimited deduction for assets left to citizen spouse
Enter marital deduction (0 if none).
⚙️ Filing Options
Portability requires filing Form 706 within 9 months of death
Select portability status.
Only if portability elected — from Form 706 of deceased spouse
Enter DSUE amount (0 if not applicable).
13 states/DC have their own estate tax with lower exemptions
Select state.
How many people will receive inheritance (for per-person estimate)
Enter number of beneficiaries (1 or more).
Net Distributable Estate
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⚠️ Disclaimer: Estate tax calculations are estimates based on 2026 federal rates (IRC Section 2001) and approximate state rates. State estate and inheritance tax calculations are approximations — actual liability depends on the specific asset types, relationship to decedent, and current state regulations. Always consult an estate planning attorney and CPA for specific situations. State exemption amounts shown are approximate for 2026.
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Sources & Methodology
Federal estate tax formulas per IRC Section 2001 and IRS Form 706 instructions. 2026 $15M exemption confirmed per OBBBA (Public Law 119-21, July 4, 2025). State exemptions from respective state revenue departments, April 2026.
IRS — Estate Tax
Official IRS guidance on estate tax including Form 706 requirements, the unified credit, portability election rules, marital deduction, and charitable deduction. Source for the 2026 $15 million basic exclusion amount under OBBBA and the anti-clawback rule.
One Big Beautiful Bill Act (OBBBA) — Public Law 119-21, July 4, 2025
The OBBBA permanently increased the federal estate and gift tax exemption to $15,000,000 per person ($30,000,000 for married couples with portability) for 2026, indexed for inflation. Prevented the TCJA sunset that would have reduced the exemption to approximately $7 million. Also preserved the step-up in basis for inherited assets.
IRS Form 706 — United States Estate (and Generation-Skipping Transfer) Tax Return
Form 706 is filed by the estate's executor when the gross estate plus adjusted taxable gifts exceeds the filing threshold. Also required to elect portability of a deceased spouse's unused exemption amount (DSUE). Due within 9 months of death, with 6-month extension available.
Core Formulas (IRC Section 2001 / IRS Form 706):
Gross Estate = Real estate + Investments + Retirement + Life insurance + Cash + Other assets
Total Deductions = Debts + Funeral/admin expenses + Charitable bequests + Marital deduction
Adjusted Taxable Gifts = Prior taxable lifetime gifts
Net Estate = Gross Estate - Total Deductions
Taxable Base = Net Estate + Adjusted Taxable Gifts
Available Exemption = $15,000,000 + DSUE (if portability elected)
Taxable Amount = max(0, Taxable Base - Available Exemption)
Federal Estate Tax = Graduated brackets 18%-40% applied to Taxable Amount above $15M
Net Distributable Estate = Net Estate - Federal Tax - State Tax
Per Beneficiary = Net Distributable Estate / Number of Beneficiaries
Note: The effective marginal rate on estates over $15M is 40% (since graduated brackets only apply to the excess, and the first $1M over exemption is taxed at 40%). State taxes applied as approximate flat-rate estimates.
Gross Estate = Real estate + Investments + Retirement + Life insurance + Cash + Other assets
Total Deductions = Debts + Funeral/admin expenses + Charitable bequests + Marital deduction
Adjusted Taxable Gifts = Prior taxable lifetime gifts
Net Estate = Gross Estate - Total Deductions
Taxable Base = Net Estate + Adjusted Taxable Gifts
Available Exemption = $15,000,000 + DSUE (if portability elected)
Taxable Amount = max(0, Taxable Base - Available Exemption)
Federal Estate Tax = Graduated brackets 18%-40% applied to Taxable Amount above $15M
Net Distributable Estate = Net Estate - Federal Tax - State Tax
Per Beneficiary = Net Distributable Estate / Number of Beneficiaries
Note: The effective marginal rate on estates over $15M is 40% (since graduated brackets only apply to the excess, and the first $1M over exemption is taxed at 40%). State taxes applied as approximate flat-rate estimates.
Inheritance & Estate Tax Guide 2026: OBBBA $15 Million Exemption
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently resolved years of estate planning uncertainty by raising the federal estate tax exemption to $15 million per person — the highest it has ever been. For the vast majority of Americans, this means zero federal estate tax. But state estate taxes with much lower exemptions, state inheritance taxes, and the complexity of calculating the net estate still leave significant room for error without proper planning.
How Federal Estate Tax Is Calculated in 2026
Gross Estate = All assets at fair market value on date of death
Net Estate = Gross Estate - Debts - Expenses - Charitable - Marital Deduction
Taxable Amount = max(0, Net Estate - $15,000,000 exemption)
Federal Estate Tax = Graduated 18%-40% on Taxable Amount (40% effective marginal rate)
Source: IRC Section 2001, Form 706 instructions
Only the amount above the exemption is taxed. The effective marginal rate on taxable amounts is 40%. Fewer than 0.1% of estates owe any federal estate tax in 2026.
Only the amount above the exemption is taxed. The effective marginal rate on taxable amounts is 40%. Fewer than 0.1% of estates owe any federal estate tax in 2026.
2026 Federal Estate Tax Brackets (Applied to Amount Over $15M)
| Taxable Amount Over Exemption | Rate | Tax on Bracket |
|---|---|---|
| $0 - $10,000 | 18% | $1,800 |
| $10,001 - $20,000 | 20% | $2,000 |
| $20,001 - $40,000 | 22% | $4,400 |
| $40,001 - $100,000 | 26-28% | Up to $17,000 |
| $100,001 - $500,000 | 30-34% | Up to $136,000 |
| $500,001 - $1,000,000 | 37-39% | Up to $195,000 |
| Over $1,000,000 | 40% | 40 cents per dollar |
States With Their Own Estate Tax (2026) — Lower Exemptions
| State | Exemption (Approx. 2026) | Top Rate |
|---|---|---|
| Oregon | $1,000,000 | 16% |
| Massachusetts | $2,000,000 | 16% |
| Washington state | $2,193,000 | 20% |
| Minnesota | $3,000,000 | 16% |
| Illinois | $4,000,000 | 16% |
| Maryland | $5,000,000 | 16% |
| Hawaii | $5,490,000 | 20% |
| Maine | $7,000,000 | 12% |
| New York | $7,350,000 | 16% |
| Connecticut | $13,610,000 | 12% |
State exemptions are approximate for 2026. New York has a "tax cliff" — if estate exceeds exemption by more than 5%, the full estate value (not just the excess) may be taxable. State rates are approximate. Consult a state estate attorney for your specific situation.
Step-Up in Basis: The Most Powerful Inheritance Tax Benefit
The step-up in basis preserved by the OBBBA means inherited assets receive a new cost basis equal to their fair market value on the date of death. Heirs can sell inherited property immediately with zero capital gains tax on pre-death appreciation — regardless of how much the asset gained in value during the decedent's lifetime. This is one of the most significant tax advantages in the U.S. tax code and a primary reason why estate planning around holding appreciated assets until death can save enormous amounts in taxes.
💡 Example: Parent bought Apple stock in 2000 for $10,000. At death in 2026, it is worth $500,000. Heir inherits it with a $500,000 basis. If sold immediately: $0 capital gains tax. Without step-up: $490,000 taxable gain at 15-23.8% = $73,500 to $116,620 in capital gains tax. The OBBBA preserved this step-up for 2026, eliminating what would have been a major tax increase.
Frequently Asked Questions
$15,000,000 per individual ($30,000,000 for married couples using portability), made permanent by the One Big Beautiful Bill Act (OBBBA) signed July 4, 2025. Estates below the threshold owe zero federal estate tax. Only the amount above $15 million is taxed at rates from 18% to 40%.
1. Calculate Gross Estate (FMV of all assets at death). 2. Subtract deductions (debts, funeral/admin expenses, marital deduction, charitable bequests). 3. Add back prior taxable lifetime gifts. 4. Subtract the $15M exemption. 5. Apply graduated brackets 18%-40% to the remainder. The estate (not the heirs) pays the tax from estate funds before distribution.
Portability lets a surviving spouse claim the deceased spouse's unused estate tax exemption (DSUE). If a spouse dies using only $5M of their $15M exemption, the surviving spouse can claim the remaining $10M — giving them up to $25M total exemption. Portability requires filing Form 706 within 9 months of death (or 15 months with extension), even if no estate tax is owed. This gives married couples an effective combined $30M exemption.
In 2026: Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington state, and Washington D.C. impose estate taxes. Exemptions range from $1M (Oregon) to $13.61M (Connecticut) — all lower than the federal $15M. Many middle-class estates that owe no federal tax still owe state estate tax.
Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania impose inheritance taxes (paid by the beneficiary). Maryland has both estate and inheritance taxes. Spouses are exempt in all five states. Rates and exemptions vary by relationship to deceased — close relatives usually pay lower rates or are exempt entirely. Iowa repealed its inheritance tax in 2024.
Generally no. Inherited cash and assets are not taxable income to beneficiaries. However: (1) Income generated by inherited assets after you receive them is taxable; (2) Withdrawals from inherited traditional IRAs/401ks are taxable as ordinary income; (3) Forgiven estate tax debts may be taxable in rare circumstances. The estate pays estate tax before distributing to you.
Inherited assets get a new cost basis equal to their fair market value at the date of death. If your parent bought stock for $10,000 and it was worth $200,000 at death, you inherit it with a $200,000 basis. Sell immediately and owe zero capital gains tax. The OBBBA preserved this step-up for 2026 — it eliminates capital gains tax on all pre-death appreciation.
Yes, if you owned the policy at death. Life insurance proceeds paid to named beneficiaries are still included in your gross estate for tax purposes if you owned or had any incidents of ownership in the policy. Strategy: transfer the policy to an Irrevocable Life Insurance Trust (ILIT) at least 3 years before death to remove it from the taxable estate.
Key deductions from gross estate: (1) Unlimited marital deduction for assets passing to U.S. citizen spouse; (2) All debts and mortgages; (3) Funeral and burial expenses; (4) Estate administration costs (executor fees, attorneys, accountants, court costs); (5) Charitable bequests (unlimited deduction). The unlimited marital deduction is the most powerful — effectively deferring all estate tax until the surviving spouse's death.
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently raised the estate and gift tax exemption to $15 million per person (indexed for inflation in future years). It prevented the TCJA sunset that would have cut the exemption to ~$7 million. It also preserved the step-up in basis for inherited assets. The anti-clawback rule protects gifts made under the current exemption from future law changes.
No. Traditional IRAs and 401ks contain pre-tax money that was never subject to capital gains tax, so they do not receive a step-up in basis at death. Beneficiaries pay ordinary income tax when they withdraw from inherited traditional IRAs or 401ks. Under SECURE Act 2.0, most non-spouse beneficiaries must fully withdraw within 10 years. Roth IRA balances are also in the estate but withdrawals are generally income-tax-free to beneficiaries.
Form 706 must be filed within 9 months of the decedent's death (with an automatic 6-month extension for a total of 15 months). It is required when the gross estate plus adjusted taxable gifts exceeds $15 million in 2026. It must also be filed even for smaller estates if the executor wants to elect portability of the unused exemption. The IRS now allows a simplified method to elect portability up to 5 years after death in some cases.
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