Inheritance Tax Estimator
Last reviewed: May 2026
The federal estate tax applies to the transfer of wealth at death, but only for estates exceeding the exemption threshold. As of 2026, fewer than 1 in 1,000 estates owe federal estate tax due to the high exemption.[1] However, the exemption is scheduled to decrease significantly when the TCJA sunsets, potentially affecting many more families. This calculator estimates your potential exposure. Use the Net Worth Calculator to assess your total estate value.
| Taxable Amount Over Exemption | Tax Rate | Tax on $1M Over | Tax on $5M Over |
|---|---|---|---|
| $0 – $10,000 | 18% | $1,800 | $1,800 |
| $10,001 – $20,000 | 20% | $2,000 | $2,000 |
| $20,001 – $40,000 | 22% | $4,400 | $4,400 |
| $40,001 – $60,000 | 24% | $4,800 | $4,800 |
| $60,001 – $80,000 | 26% | $5,200 | $5,200 |
| $500,001 – $750,000 | 37% | N/A | $92,500 |
| $1,000,001+ | 40% | N/A | $345,800+ |
The Tax Cuts and Jobs Act of 2017 roughly doubled the estate tax exemption from approximately $5.5 million to over $12 million per individual. This provision is scheduled to sunset after December 31, 2025, which would return the exemption to approximately $7 million (adjusted for inflation). For married couples, this means the combined exemption would drop from approximately $27 million to approximately $14 million. Estates in the $7 million to $14 million range per individual that currently owe nothing would face potential 40% taxation on amounts above the reduced threshold. This looming change has created urgency for estate planning: gifts made before the sunset under the current higher exemption will be grandfathered — the IRS has confirmed that it will not claw back the benefit of the higher exemption for gifts made while it was in effect. This means 2025 represents a critical planning window for wealthy families to lock in the current exemption through irrevocable gifts and trusts.
| State | Tax Type | Exemption | Top Rate |
|---|---|---|---|
| Oregon | Estate | $1 million | 16% |
| Massachusetts | Estate | $2 million | 16% |
| New York | Estate | $6.94 million | 16% |
| Washington | Estate | $2.193 million | 20% |
| Maryland | Both | $5 million (estate) | 16% + 10% |
| Iowa | Inheritance | Varies by heir | Up to 15% |
| Pennsylvania | Inheritance | None | 4.5–15% |
State-level estate taxes apply at much lower thresholds than the federal tax. Oregon and Massachusetts tax estates above $1 million and $2 million respectively — thresholds that capture many middle-class homeowners in high-value real estate markets. State and federal estate taxes are cumulative: a $15 million estate in Washington state could face both federal estate tax (40% on amounts above the federal exemption) and Washington estate tax (up to 20% on amounts above $2.193 million). However, federal estate tax allows a deduction for state estate taxes paid, providing partial relief from double taxation. For high-net-worth individuals in estate-tax states, relocation planning can yield substantial savings — moving from Washington (20% top rate) to a state without estate tax eliminates the state-level exposure entirely.
The federal gift tax exemption is unified with the estate tax exemption — meaning gifts made during your lifetime reduce the amount available at death. The annual gift exclusion ($18,000 per recipient in 2024) allows tax-free gifts without touching the lifetime exemption. A couple with three children and three grandchildren can give away $108,000 annually ($18,000 × 6 recipients) without any gift tax implications or lifetime exemption reduction. Over 10 years, that removes $1.08 million from the estate. Direct payments for tuition or medical expenses — paid directly to the institution, not to the individual — are also exempt from gift tax without limit and do not count toward the annual exclusion. These unlimited exclusions for education and medical costs are among the most powerful estate reduction tools available.
For estates exceeding or approaching the exemption threshold, irrevocable trusts transfer assets out of the taxable estate while maintaining varying degrees of control and benefit. An Irrevocable Life Insurance Trust (ILIT) holds life insurance policies outside the estate, ensuring the death benefit — which can be millions of dollars — passes to beneficiaries completely free of estate tax. A Grantor Retained Annuity Trust (GRAT) transfers appreciation to beneficiaries while the grantor retains annuity payments; if the assets outperform the IRS hurdle rate (Section 7520 rate), the excess growth passes estate-tax-free. Qualified Personal Residence Trusts (QPRTs) transfer a home at a discounted value while allowing continued residence for a specified term. Each strategy involves trade-offs between control, access, cost, and tax benefit. Estate planning of this complexity requires coordination between an estate attorney, CPA, and financial advisor to ensure all pieces work together correctly.
One of the most valuable tax provisions in estate planning is the stepped-up basis rule: when assets pass through an estate at death, their cost basis resets to the fair market value on the date of death. If you purchased stock for $50,000 that has grown to $500,000, selling during your lifetime would trigger $450,000 in capital gains tax. If instead it passes through your estate, your heirs inherit it with a $500,000 basis and can sell immediately with zero capital gains tax. This step-up applies to real estate, stocks, business interests, and most other appreciated assets. The stepped-up basis creates a strong incentive to hold highly appreciated assets until death rather than gifting them during lifetime (gifts carry over the donor's original basis). For families with substantial unrealized capital gains, the step-up can save more in capital gains tax than the estate would owe in estate tax, particularly for estates near or below the exemption threshold. Use our Capital Gains Calculator to model the tax impact of selling versus holding appreciated assets.
Charitable giving directly reduces the taxable estate dollar-for-dollar. A $2 million bequest to charity removes $2 million from the estate tax calculation, saving up to $800,000 in federal estate tax at the 40% rate. Charitable Remainder Trusts (CRTs) provide income to the donor during their lifetime and transfer the remaining assets to charity at death — generating both an income tax deduction at creation and an estate tax reduction at death. Donor-Advised Funds (DAFs) allow front-loading charitable deductions into a single tax year while distributing grants to charities over time. For individuals who are charitably inclined, combining charitable planning with estate planning can achieve philanthropic goals while substantially reducing estate tax exposure. Naming a charity as the beneficiary of retirement accounts (IRAs, 401ks) is particularly tax-efficient because retirement assets are subject to both estate tax and income tax when inherited by non-spouse beneficiaries — charities pay neither.
Estate tax planning is only one component of comprehensive estate planning. Regardless of estate size, every adult should have four foundational documents: a will (directing asset distribution and naming guardians for minor children), a durable power of attorney (designating someone to make financial decisions if you become incapacitated), a healthcare proxy or medical power of attorney (designating someone to make medical decisions), and a living will or advance directive (stating your wishes regarding end-of-life care). Without a will, state intestacy laws determine who inherits your assets — which may not align with your wishes, particularly for unmarried partners, stepchildren, or charitable causes. Beneficiary designations on retirement accounts, life insurance, and transfer-on-death accounts override will provisions, so keeping these updated is equally important. For understanding your total estate value, use our Net Worth Calculator.
→ File for portability. Even if no tax is owed, filing Form 706 preserves the unused exemption for the surviving spouse.[1]
→ Use annual gift exclusions. $18,000 per person per year reduces your taxable estate over time.[2]
→ Life insurance in an ILIT. Insurance proceeds held in an irrevocable trust are excluded from the taxable estate.
→ Consult an estate attorney. Estate tax law is complex and changes frequently.
See also: Net Worth · Retirement · Tax Calculator · RMD