Estate Tax Calculator
Calculate federal estate tax liability under the 2025 exemption of $13.99 million and see how the liability changes if the Tax Cuts and Jobs Act provisions sunset in 2026, potentially halving the exemption to approximately $7 million. Includes marital deduction, charitable deduction, and optional state estate tax calculation.
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How It Works
The taxable estate is gross estate minus debts, mortgages, funeral expenses, administration costs, marital deduction, and charitable deductions. The remaining amount is compared against the available exemption.
Taxable = Gross Estate − Debts − Marital − Charitable − Exemption$20M estate − $5M marital − $13.99M exemption = $1.01M taxableEstate tax applies at a flat 40% rate on the taxable estate (amount above the exemption). Unlike income tax, there is no progressive bracket structure — all taxable amounts are taxed at 40%.
Tax = max(0, Taxable Estate) × 40%$1.01M taxable × 40% = $404,000 federal estate taxThe calculator shows estate tax under both the 2025 exemption ($13.99M) and the potential 2026 reduced exemption (~$7M). Estates between $7M and $14M face significant additional tax if TCJA sunsets.
Additional tax = (2026 Taxable Estate − 2025 Taxable Estate) × 40%$12M estate: $0 tax in 2025; $2M+ tax in 2026A surviving spouse can use the deceased spouse's unused exemption (DSUE) by making a portability election on the estate tax return within 5 years of death. This effectively doubles the couple's combined exemption.
Combined exemption = First spouse DSUE + Second spouse exemption$13.99M unused DSUE + $13.99M own exemption = $27.98M combinedThe annual gift exclusion ($19,000 per recipient in 2025, $38,000 for married couples) allows tax-free transfers that reduce the taxable estate over time. Consistent gifting over 20 years to multiple recipients can remove millions from a taxable estate.
Annual transfer = $19,000 × recipients × 2 (if couple)Couple giving to 3 adult children: $38K × 3 = $114K/yr removed from estateStates with estate taxes use much lower exemptions (often $2M to $5M) and rates of 10% to 20% on the taxable amount above the state exemption. Residents of high-tax states face estate tax at much lower wealth levels than the federal trigger.
State tax = max(0, Estate − State Exemption) × State Rate$5M estate in Massachusetts: ($5M − $2M) × 16% = $480,000 state taxQuick Reference
Common examples — verify instantly above.
2025 federal exemption
Per person
$13,990,000
2026 potential exemption
Post-TCJA sunset estimate
~$7,000,000
$20M estate (2025)
Federal tax (single)
$2,404,000
$20M estate (2026)
If TCJA sunsets
$5,204,000 (+$2.8M)
Estate tax rate
Federal flat rate above exemption
40% flat
Annual gift exclusion
2025 per recipient
$19,000
Massachusetts exemption
State estate tax
$2,000,000
Portability benefit
Married couple 2025
Up to $27.98M combined
Tips & Shortcuts
The TCJA sunset in 2026 is the most urgent estate planning deadline for estates between $7M and $14M. Irrevocable transfers made before 2026 lock in the higher exemption — consult an estate attorney now.
Make annual exclusion gifts ($19,000 per recipient in 2025) consistently to multiple family members. A couple with three adult children each married can gift $114,000 per year tax-free, removing $1.14M from the estate each decade.
File a portability election on the first spouse's estate tax return (Form 706) even if no estate tax is owed. This preserves the deceased spouse's unused exemption for the surviving spouse's estate.
Irrevocable life insurance trusts (ILITs) keep life insurance proceeds out of the taxable estate. Proper structuring means a $5M policy owned by an ILIT provides $5M to heirs without adding to the taxable estate.
Consider gifting appreciated assets strategically. During life, gifted assets retain the donor's cost basis (capital gains follow). At death, assets receive a step-up in basis, eliminating embedded capital gains for heirs.
State estate taxes can be avoided by changing domicile to a state with no estate tax. This requires genuine change of domicile — not just changing a driver's license — and must be completed well before death.
Common Mistakes to Avoid
Assuming the TCJA estate tax exemption is permanent
The $13.99M exemption is scheduled to sunset after 2025. Failing to plan before 2026 could expose estates between $7M and $14M to significant federal estate tax that could have been avoided through pre-2026 planning.
Not making a portability election after the first spouse dies
Portability must be elected on a timely filed estate tax return. Missing this election forfeits the deceased spouse's unused exemption, potentially costing millions in future estate tax for the surviving spouse.
Including life insurance in the taxable estate
Life insurance owned by the insured is included in the taxable estate. Transferring policies to an ILIT removes them from the estate. The transfer must occur more than 3 years before death to be effective.
Focusing only on federal estate tax and ignoring state estate taxes
States like Massachusetts and Oregon tax estates above $2M at rates up to 16%. A $5M estate in Massachusetts owes $480,000+ in state estate tax even with no federal estate tax. Include state analysis in estate planning.
Not keeping the gross estate below the exemption through lifetime gifting
Annual exclusion gifting is the simplest estate reduction tool. Couples who consistently gift to children and grandchildren can remove millions from the estate over time with no gift tax consequences.
Leaving everything to a spouse without considering future combined estate tax
Leaving all assets to a surviving spouse defers estate tax but can create a larger combined estate. A bypass trust or strategic use of portability keeps more assets outside both taxable estates.
Frequently Asked Questions
The federal estate tax exemption is $13.99 million per person in 2025, indexed for inflation. Married couples can combine exemptions for up to $27.98 million (portability). The estate tax rate above the exemption is a flat 40%. Estates below the exemption owe no federal estate tax.
The Tax Cuts and Jobs Act doubled the estate tax exemption starting in 2018. These provisions are scheduled to sunset after 2025, potentially reducing the exemption to approximately $7 million in 2026 (the pre-TCJA level, inflation-adjusted). This represents a major planning deadline for estates between $7M and $14M.
Assets transferred to a US citizen spouse are 100% exempt from federal estate tax regardless of amount. This unlimited marital deduction delays estate tax until the surviving spouse's death. Proper planning with portability or a bypass trust maximizes use of both spouses' exemptions.
Assets left to qualified charitable organizations reduce the taxable estate dollar for dollar. There is no limit on the charitable estate tax deduction. A bequest to charity reduces the taxable estate by the exact dollar amount given, while the estate's heirs receive the after-tax residual.
As of 2025, 12 states and DC impose their own estate tax: Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington. State exemptions are generally much lower than federal — Massachusetts and Oregon tax estates above $2 million.
Key strategies include: making annual gifts ($19,000/person/year in 2025, $38,000 for couples), funding irrevocable life insurance trusts (ILITs), establishing charitable remainder trusts (CRTs), creating grantor retained annuity trusts (GRATs), and maximizing use of both spouses' exemptions through portability elections.
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