Estate Tax Calculator — Free (2026)

The Estate Tax Calculator helps you estimate your federal and state estate tax liability, enabling strategic planning to minimize taxes and maximize wealth transfer to heirs. Understanding estate tax is essential for high-net-worth individuals and business owners planning their legacy.

What is Estate Tax?

Estate tax is a federal tax on the transfer of a deceased person's assets to heirs. It applies to the total value of a person's estate, regardless of how assets are distributed.

Key characteristics:

• Federal tax: Applies to estates exceeding $13.61 million (2024)
• Flat rate: 40% tax on the amount exceeding the exemption
• State tax: Additional state estate taxes in 13 states plus D.C.
• Portability: Surviving spouses can use the deceased spouse's unused exemption
• Sunset clause: Federal exemption reverts to ~$7M after 2025 unless Congress acts

Who pays? The estate pays the tax before distributing assets to heirs. The estate executor is responsible for filing the federal Form 706 (Estate Tax Return) if the estate exceeds the exemption.

How Estate Tax is Calculated

Estate tax is calculated on your taxable estate using a straightforward process:

Formula:

Estate Tax = (Taxable Estate - Federal Exemption) × 40%

Components of Taxable Estate:

• Real property (homes, land, commercial buildings)
• Financial assets (stocks, bonds, bank accounts)
• Business interests and partnerships
• Life insurance proceeds (owned by deceased)
• Retirement accounts (IRAs, 401(k)s)
• Vehicles, collectibles, and personal property

Allowable Deductions:

• Debts and mortgages owed by deceased
• Funeral and administrative expenses
• Charitable bequests (dollar-for-dollar deduction)
• Marital deduction (unlimited transfer to spouse)

Calculation Example:

• Gross estate: $25,000,000
• Less debts and expenses: -$500,000
• Less marital deduction: -$5,000,000
• Taxable estate: $19,500,000
• Less federal exemption: -$13,610,000
• Estate subject to tax: $5,890,000
• Federal estate tax (40%): $2,356,000

Federal Exemption and Portability

The federal exemption is the amount of assets you can pass to heirs free from federal estate tax.

2024 Federal Exemption: $13,610,000 per person

Important points:

• Married couples can combine exemptions ($27.22M total with portability)
• The exemption is indexed annually for inflation
• Portability allows a surviving spouse to use the deceased spouse's unused exemption
• Without portability planning, the second spouse's exemption is wasted

Exemption Sunset:

• Current high exemption expires December 31, 2025
• Reverts to approximately $7 million per person (adjusted for inflation)
• Congress may extend the exemption before the deadline
• This creates urgency for estate planning before 2026

State Estate Tax Overview

Only 13 states and Washington D.C. impose estate taxes, with significantly lower exemptions than federal.

States with Estate Tax (2024):

• Connecticut: $13.61M exemption, 12% rate
• Delaware: $13.61M exemption, 16% rate
• Hawaii: $5.49M exemption, 10-20% rates
• Illinois: $4M exemption, 8-16% rates
• Maine: $6.41M exemption, 8-12% rates
• Maryland: $5M exemption, 16% rate (also has inheritance tax)
• Massachusetts: $2M exemption, 8-16% rates (lowest exemption)
• Minnesota: $3M exemption, 13-16% rates
• New York: $6.94M exemption, 5-16% rates (cliff tax applies)
• Oregon: $1M exemption, 10-16% rates
• Rhode Island: $1.73M exemption, 8-16% rates
• Vermont: $5M exemption, 16% rate
• Washington: $2.19M exemption, 10-20% rates
• Washington D.C.: $4.53M exemption, 12-16% rates

State Planning Considerations:

• State exemptions are much lower than federal
• Residents taxed on worldwide estate
• Some states tax non-residents on state property
• Moving to a no-estate-tax state can save substantial taxes
• Timing matters: must establish residency before death

Marital Deduction Strategy

The marital deduction allows unlimited transfer of assets between spouses free from estate tax, but careful planning is essential.

Key Features:

• Unlimited transfer: No limit on assets passing to U.S. citizen spouse
• Tax deferral: Doesn't eliminate tax, just postpones to second spouse's death
• Portability: Unused exemption can transfer to surviving spouse
• Non-citizen limitation: Limited to $185,000 (2024) unless using Qualified Domestic Trust (QDOT)

Planning Strategy: Instead of leaving everything to spouse (wasting your exemption), use:

• Credit Shelter Trust: Fund with your $13.61M exemption, remainder to spouse
• Marital Trust (QTIP): Provides income to spouse, preserves assets for children
• Portability election: Simpler alternative, but less control and asset protection

Example - $30M Estate, Married Couple:

Without Planning (Everything to Spouse):

• First spouse dies: $0 tax (marital deduction)
• Assets ($30M) to surviving spouse
• Second spouse dies: ($30M - $13.61M) × 40% = $6.556M tax

With Credit Shelter Trust (Optimal Planning):

• First spouse dies: Fund trust with $13.61M, remainder to spouse: $0 tax
• Trust assets ($13.61M) skip to children's generation
• Second spouse dies: ($30M - $13.61M) × 40% = $6.556M tax
• Net result: $13.61M passes to children tax-free

Tax savings with proper planning: $5.444M

Charitable Giving and Estate Tax

Charitable bequests are fully deductible from your taxable estate, providing both charitable impact and tax savings.

Benefits of Charitable Deductions:

• Dollar-for-dollar reduction: Every $1 to charity reduces taxable estate by $1
• No limits: Unlike income tax, there's no limit on charitable deductions
• Tax savings rate: Effectively 40% federal (plus state if applicable)
• Legacy benefit: Support causes you care about while reducing taxes

Charitable Strategies:

• Direct bequest: Leave percentage or dollar amount in your will
• Charitable Remainder Trust (CRT): Provides income during life, remainder to charity
• Charitable Lead Trust (CLT): Charity receives income, remainder to heirs (removes growth from estate)
• Private Foundation: Create lasting family legacy with tax savings
• Donor-Advised Fund: Simple alternative to foundation with lower setup costs

Example - $30M Estate with $5M Charitable Gift:

• Gross estate: $30,000,000
• Charitable bequest: -$5,000,000
• Marital deduction: -$5,000,000
• Taxable estate: $20,000,000
• Less federal exemption: -$13,610,000
• Amount subject to tax: $6,390,000
• Federal estate tax (40%): $2,556,000

Versus without charity:

• Taxable estate would be: $16,390,000
• Federal estate tax (40%): $3,156,000
• Tax savings from $5M charitable gift: $600,000 (40% of donation)

This effectively costs your heirs only $4.4M to give $5M to charity!

Estate Tax Formula

Federal Estate Tax:

Taxable Estate = (Gross Estate - Deductions)

Federal Estate Tax = (Taxable Estate - Federal Exemption) × 40%

State Estate Tax (varies by state):

State Estate Tax = (Taxable Estate - State Exemption) × State Rate

Step-by-Step Estate Tax Calculation Example

Scenario: $50M Estate (Married, with Planning)

Estate Details

• Primary residence: $5,000,000
• Investment portfolio: $20,000,000
• Vacation home: $3,000,000
• Business interests: $15,000,000
• Life insurance: $5,000,000
• Bank accounts/cash: $2,000,000
• Gross estate: $50,000,000

Step 1: Calculate Allowable Deductions

• Debts/mortgages: -$500,000
• Funeral/admin costs: -$100,000
• Charitable bequests: -$2,000,000
• Marital deduction (to spouse): -$8,000,000
• Total deductions: $10,600,000

Step 2: Calculate Taxable Estate

• Gross estate: $50,000,000
• Less deductions: -$10,600,000
• Taxable estate: $39,400,000

Step 3: Apply Federal Exemption

• Taxable estate: $39,400,000
• Federal exemption (2024): -$13,610,000
• Amount subject to federal tax: $25,790,000

Step 4: Calculate Federal Estate Tax

• Federal estate tax (40%): $25,790,000 × 0.40 = $10,316,000

Step 5: State Estate Tax (New York example)

• If estate in NY: $39,400,000
• NY exemption (2024): -$6,940,000
• Amount subject to NY tax: $32,460,000
• NY tax rate: 12-16% average = 14%
• State estate tax: $32,460,000 × 0.14 = $4,544,400

Step 6: Total Estate Tax

• Federal estate tax: $10,316,000
• State estate tax: $4,544,400
• Total estate tax: $14,860,400

Impact with Proper Planning

With credit shelter trusts and portability planning:

• Federal exemption utilized: $13,610,000
• Spouse's exemption available: $13,610,000
• Additional protection: $8,000,000+ in tax savings possible
• Remaining taxable estate: $17,790,000
• Federal tax with planning: ~$7,116,000
• Planning savings: ~$3.2M in federal taxes alone

Estate Tax Examples by Estate Size

Estate Size	Federal Exemption	Taxable Amount	Federal Tax (40%)	State Tax*	Total Tax
$5M	$13.61M	$0	$0	$0	$0
$15M	$13.61M	$1.39M	$556,000	$80,000	$636,000
$25M	$13.61M	$11.39M	$4,556,000	$800,000	$5,356,000
$50M	$13.61M	$36.39M	$14,556,000	$2,400,000	$16,956,000
$100M	$13.61M	$86.39M	$34,556,000	$6,000,000	$40,556,000

State tax example based on 5-7% average state rate; actual rates vary significantly by state

Estate Tax vs. Income Tax

Estate tax and income tax are fundamentally different. Income tax is an annual tax on earnings during your working lifetime, calculated on what you earn each year. Estate tax, by contrast, is a one-time transfer tax imposed at death on the total value of your assets—not on income, but on accumulated wealth. You pay income tax on earnings during life; your estate pays estate tax only once, on remaining assets at death. This distinction is important for planning, as it affects how you structure your assets and beneficiary designations.

Strategies to Reduce Estate Tax Liability

Many strategies can substantially reduce estate tax. Annual gifting allows you to give up to $18,000 per recipient per year without gift tax, effectively removing assets from your taxable estate. Charitable giving provides dollar-for-dollar deductions from your taxable estate while supporting causes you care about. Trusts—particularly credit shelter trusts, marital trusts, and charitable trusts—allow you to preserve assets for heirs while minimizing taxes. Life insurance planning can provide liquidity to pay estate taxes without forcing asset sales. Family partnerships and limited liability companies can discount asset values for tax purposes. Strategic planning through these methods can save hundreds of thousands or even millions of dollars in taxes.

Consequences of Inadequate Estate Planning

Without proper planning, your estate pays the maximum estate tax rate: 40% federal plus state taxes where applicable. This can create a severe financial burden on your heirs. Families are often forced to sell family assets—the primary residence, vacation home, or family business—just to pay the estate tax bill. This is particularly painful when the business or property has sentimental value or represents a family legacy. Proper planning ensures your assets transfer to your heirs efficiently, not to the government through unnecessary taxes.

Portability and Spousal Exemptions

Married couples benefit from a special election called portability. If you file an estate tax return and elect portability after your spouse's death, your surviving spouse can use your unused exemption in addition to their own. For example, if you have a $27.22M combined estate and the first spouse dies having used no exemption, the surviving spouse can now use $13.61M + $13.61M = $27.22M before federal estate tax applies. Without portability planning, the first spouse's exemption is wasted, effectively doubling the tax burden on the second spouse's estate. This is one of the most valuable planning strategies available to married couples.

Timeline and Payment Deadlines

Federal estate tax is due 9 months after death, though the executor can request an extension. This creates significant urgency: the estate must file the Form 706 (Estate Tax Return) and arrange payment within a relatively short timeframe. Many estates lack sufficient liquid cash, which is why life insurance and other liquidity planning is essential. If the estate cannot pay the tax on time, penalties and interest accrue quickly, increasing the total cost substantially.

Planning for the 2026 Exemption Sunset

The current federal exemption of $13.61M per person expires on December 31, 2025, at which point it reverts to approximately $7 million per person (adjusted for inflation). Congress may extend the exemption before the deadline, but there is no guarantee. Large estates should implement strategies now to lock in benefits while the high exemption is available. This might include making large lifetime gifts while you can use your $13.61M exemption, establishing irrevocable trusts, or implementing other wealth transfer strategies. The closer we get to 2025, the more critical it becomes to act, as the potential exemption drop represents a permanent tax increase for estates exceeding the new $7M threshold.

FAQ

How can I reduce my estate tax liability? Through gifting during life ($18,000 annual per recipient), charitable giving, trusts (credit shelter, marital, charitable), life insurance planning, and family partnerships. Strategic planning can save hundreds of thousands or millions.

What if I don't plan for estate tax? Without planning, your estate pays maximum tax (40% federal plus state). Your heirs may need to sell family assets to pay the tax bill, potentially forcing the loss of the family home or business.

Can I transfer my unused exemption to my spouse? Yes, through portability. If you elect portability after death, your surviving spouse can use your unused exemption in addition to their own, potentially doubling available exemption to $27.22M.

When is federal estate tax due? Federal estate tax is due 9 months after death, though extensions are available. Quick payment is critical to avoid penalties and interest.

Should I act before the 2026 exemption sunset? Yes. The exemption expires December 31, 2025, reverting to ~$7M. Large estates should implement strategies now to lock in benefits while the high exemption is available.

Related Calculators

Inheritance Tax Calculator • Gift Tax Calculator • Retirement Calculator • Wealth Calculator • Trust Planning Tools

Sources & References

• IRS - Estate Tax Information
• Federal Reserve - Estate Tax Historical Data
• State Tax Resources - State Estate Tax Guides
• AICPA - Estate Planning Information
• National Association of Estate Planners - Planning Resources

Disclaimer

This calculator is provided for educational and informational purposes only. It is not legal, tax, or investment advice. Estate tax laws are complex and vary by jurisdiction. Actual estate tax liability depends on many factors including: domicile, asset types, beneficiary status, marital status, and state residence.

Do not rely on this calculator for:

• Legal decisions about trusts or beneficiary designations
• Tax planning without consulting a tax professional
• Investment decisions regarding estate assets
• Timing of major life decisions

Before making any estate planning decisions, consult with:

• A qualified estate planning attorney
• A CPA or enrolled agent specializing in estate tax
• A financial advisor familiar with your complete financial picture
• A professional fiduciary if needed

Past performance does not guarantee future results. Tax laws change frequently, and the exemption amount varies annually. Always verify current exemption amounts and rates before making decisions.

Frequently Asked Questions