Estate Tax Calculator: 2026 Federal Exemption & Rates Guide
Quick Answer
- *The 2026 federal estate tax exemption is $13.99 million per individual ($27.98 million for married couples).
- *Only about 0.2% of estates are large enough to owe federal estate tax (Tax Policy Center, 2025).
- *The top estate tax rate is 40%, applied only to the taxable amount above the exemption.
- *The elevated exemption may sunset after 2025 under current TCJA law, reverting to roughly $7 million — planning now matters.
What Is the Federal Estate Tax?
The federal estate tax is a tax on the transfer of a deceased person's assets to their heirs. It applies only to the portion of an estate that exceeds the exemption threshold. According to the IRS (2025), the federal estate tax exemption is $13.99 million per individual for 2026 — meaning the vast majority of Americans will never owe a dollar of federal estate tax.
The tax is sometimes called the “death tax.” It is separate from income tax and applies to the total fair market value of everything you own at death: real estate, investment accounts, retirement accounts (in some cases), business interests, life insurance proceeds (if you own the policy), and personal property.
The 2026 Federal Estate Tax Exemption
The Tax Cuts and Jobs Act (TCJA) of 2017 roughly doubled the estate tax exemption. For 2026, the IRS has set the exemption at $13.99 million per individual. For married couples using the portability election, the combined exemption reaches $27.98 million.
Here is how the exemption has changed in recent years:
| Year | Exemption Per Person | Top Rate |
|---|---|---|
| 2020 | $11.58 million | 40% |
| 2021 | $11.70 million | 40% |
| 2022 | $12.06 million | 40% |
| 2023 | $12.92 million | 40% |
| 2024 | $13.61 million | 40% |
| 2025 | $13.99 million | 40% |
| 2026 (current) | $13.99 million | 40% |
The TCJA Sunset: A Critical Planning Window
Unless Congress acts, the elevated exemption is scheduled to revert to pre-TCJA levels after December 31, 2025. Adjusted for inflation, the reverted exemption would be roughly $7 million per individual— cutting the threshold nearly in half. Estates between $7 million and $14 million that currently owe nothing could face significant federal estate tax if the sunset occurs.
The IRS has confirmed (Revenue Procedure 2019-33) that gifts made under the higher exemption will not be “clawed back” if the exemption later decreases. This makes 2025–2026 a compelling window for large gifting strategies.
Federal Estate Tax Rates
The estate tax is graduated. Only the amount above the exemption is taxable, and that amount is taxed at rates from 18% up to 40%. Here is the full rate schedule:
| Taxable Amount Above Exemption | Tax Rate | Tax on Full Bracket |
|---|---|---|
| $0 – $10,000 | 18% | $1,800 |
| $10,001 – $20,000 | 20% | $2,000 |
| $20,001 – $40,000 | 22% | $4,400 |
| $40,001 – $60,000 | 24% | $4,800 |
| $60,001 – $80,000 | 26% | $5,200 |
| $80,001 – $100,000 | 28% | $5,600 |
| $100,001 – $150,000 | 30% | $15,000 |
| $150,001 – $250,000 | 32% | $32,000 |
| $250,001 – $500,000 | 34% | $85,000 |
| $500,001 – $750,000 | 37% | $92,500 |
| $750,001 – $1,000,000 | 39% | $97,500 |
| Over $1,000,000 | 40% | Continues at 40% |
In practice, estates large enough to owe tax typically end up with an effective rate of 17–20%, because only the portion above the exemption is taxed, and the lower brackets apply first.
State Estate Taxes
As of 2025, 12 states and Washington D.C. impose their own estate taxes, often with much lower exemptions than the federal threshold. This means residents of those states can owe state estate tax even if they owe nothing federally.
| State | Exemption | Top Rate |
|---|---|---|
| Oregon | $1 million | 16% |
| Massachusetts | $2 million | 16% |
| Washington | $2.193 million | 20% |
| Minnesota | $3 million | 16% |
| Illinois | $4 million | 16% |
| Maine | $6.8 million | 12% |
| New York | $7.16 million | 16% |
Six states also have inheritance taxes (Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania), which are paid by beneficiaries rather than the estate itself. Maryland is unique in having both an estate tax and an inheritance tax.
6 Strategies to Reduce Estate Tax Exposure
1. Annual Gift Tax Exclusion
You can give up to $19,000 per recipient per year (2026 limit) without using any of your lifetime exemption or filing a gift tax return. Married couples can combine to give $38,000 per recipient annually. Over 10 years, a couple with 4 children could transfer $1.52 million this way, completely outside the taxable estate. See our gift tax guide for the full mechanics.
2. Irrevocable Life Insurance Trust (ILIT)
Life insurance proceeds are included in your taxable estate if you own the policy. Transferring ownership to an Irrevocable Life Insurance Trust (ILIT) removes the proceeds from your estate. A $2 million policy owned inside an ILIT avoids up to $800,000 in estate tax at the 40% rate.
3. Spousal Portability Election
When a spouse dies, any unused portion of their federal exemption can be transferred to the surviving spouse via a portability election (filed on a timely estate tax return, Form 706). In 2026, a surviving spouse who properly elects portability could shield up to $27.98 million from estate tax.
4. Charitable Remainder Trust (CRT)
A CRT lets you transfer appreciated assets to a trust, receive an income stream for life (or a term of years), take an immediate partial charitable deduction, and reduce your taxable estate. The IRS reports that charitable bequests in 2022 totaled over $46 billion, many structured through trusts specifically to reduce estate tax liability.
5. Qualified Personal Residence Trust (QPRT)
A QPRT lets you transfer your home to an irrevocable trust while retaining the right to live there for a set term. The taxable gift is discounted based on the retained interest, making it a tax-efficient way to transfer real property out of your estate. This strategy is especially useful for high-value homes in states with low estate tax exemptions.
6. Roth Conversion Before Death
Traditional IRAs and 401(k)s are included in your taxable estate at their full value. Converting to a Roth before death reduces the estate value by the taxes paid on conversion. This does double duty: it shrinks the estate and passes income-tax-free assets to heirs. Use our Roth conversion guide to model the numbers.
How Estate Tax Is Calculated: A Real Example
Let's say someone dies in 2026 with a gross estate of $18 million. They have $500,000 in debts and funeral expenses, and $200,000 in deductible charitable bequests.
| Item | Amount |
|---|---|
| Gross estate | $18,000,000 |
| Less: debts & expenses | ($500,000) |
| Less: charitable deduction | ($200,000) |
| Adjusted gross estate | $17,300,000 |
| Less: federal exemption (2026) | ($13,990,000) |
| Taxable estate | $3,310,000 |
| Estimated federal estate tax (approx. 37–40%) | ~$1,193,600 |
Without proper planning, this estate owes roughly $1.2 million in federal estate tax alone, plus any applicable state estate tax. That's why estate planning matters even for estates comfortably above the exemption — the exposure grows quickly.
Calculate your potential estate tax liability
Try our free Estate Tax Calculator →Related: Capital Gains Tax Guide • Gift Tax Guide • Roth Conversion Guide
Who Actually Pays Estate Tax?
According to the Tax Policy Center (2025), only about 0.2% of estates — roughly 4,100 estates — will owe any federal estate tax under the current exemption level. The Joint Committee on Taxation estimates that federal estate and gift taxes will raise approximately $26 billion in fiscal year 2025, a fraction of total federal revenue.
The picture changes dramatically at the state level. In states like Oregon and Massachusetts with $1–2 million exemptions, a modest home plus retirement savings can cross the threshold. A homeowner in Portland with a $900,000 home, $300,000 in a 401(k), and $200,000 in savings could owe Oregon estate tax.
Filing Requirements: Form 706
An estate must file Form 706 (United States Estate Tax Return) if the gross estate exceeds the filing threshold ($13.99 million in 2026). The return is due 9 months after the date of death, with a possible 6-month extension. Even if no tax is owed, filing may be required to elect portability for the surviving spouse.
The IRS emphasizes that valuations of non-liquid assets (closely held businesses, real estate, art) must be supported by qualified appraisals. Undervaluing assets is one of the most common audit triggers for estate returns.
Related Guides and Tools
- Gift Tax Guide: Annual Exclusions and Lifetime Limits
- Roth Conversion Guide: When It Makes Sense
- Capital Gains Tax 2026: Rates, Thresholds, and Planning
- 2026 Federal Tax Brackets Guide
Frequently Asked Questions
What is the federal estate tax exemption for 2026?
The federal estate tax exemption for 2026 is $13.99 million per individual, or $27.98 million for married couples using portability. Estates below this threshold owe no federal estate tax. Only about 0.2% of estates are large enough to be subject to the tax, according to the Tax Policy Center (2025).
What happens to the estate tax exemption after 2025?
The elevated exemption was set by the Tax Cuts and Jobs Act of 2017. Unless Congress acts, the exemption is scheduled to revert to roughly $7 million per individual (inflation-adjusted) after December 31, 2025. The 2026 exemption reflects the current law, but this remains subject to legislative change.
What is the top federal estate tax rate?
The top federal estate tax rate is 40%, applied to the taxable estate value above the exemption threshold. The rate is graduated — smaller amounts above the exemption face lower marginal rates starting at 18%, ramping up to 40% on the portion exceeding $1 million above the exemption.
Do states have their own estate taxes?
Yes. As of 2025, 12 states and Washington D.C. impose their own estate taxes, with exemptions as low as $1 million (Oregon, Massachusetts). State estate taxes are separate from the federal estate tax, meaning residents of those states may owe both. Some states also levy inheritance taxes on beneficiaries.
Can a surviving spouse avoid estate tax?
Yes. Assets passed to a U.S. citizen spouse qualify for the unlimited marital deduction — no estate tax is owed at the first spouse's death. The surviving spouse can also use portability to carry over the deceased spouse's unused exemption, effectively doubling the exemption for the surviving spouse's estate.
What is the annual gift tax exclusion for 2026?
The annual gift tax exclusion for 2026 is $19,000 per recipient. Married couples can give $38,000 per recipient per year through gift splitting. Gifts within this annual limit do not count against your lifetime exemption or require a gift tax return. See our gift tax guide for full details.