Estate Tax Calculator

The federal estate tax only affects a small percentage of estates — but for those that exceed the exemption, it can be substantial. This calculator estimates federal estate tax so you can plan accordingly.

What Is the Estate Tax?

The federal estate tax is a tax on the transfer of wealth at death. It applies to the taxable estate (total assets minus allowable deductions and exemptions). In 2025, the federal exemption is $13.99 million per individual ($27.98 million for married couples using portability). Only estates above the exemption owe federal estate tax.

How to Use This Calculator

1. Enter the total gross estate value (all assets: real estate, investments, retirement accounts, life insurance, business interests).
2. Enter deductible debts and expenses (mortgages, funeral costs, estate administration).
3. Enter any marital or charitable deductions.
4. Enter the applicable exemption amount.
5. Click Calculate to see taxable estate and estimated tax owed.

2025 Federal Estate Tax Rates

• Taxable estate $0–$10,000: 18%
• $10,001–$20,000: 20%
• $20,001–$40,000: 22%
• ... (progressive brackets) ...
• Over $1,000,000: 40% (top rate)

Effective rate on large estates well above the exemption: typically 35%–40% on the amount above the exemption.

Example Calculation

Gross estate: $20,000,000 | Debts/expenses: $500,000 | Exemption (2025): $13,990,000

• Taxable estate: $20,000,000 − $500,000 − $13,990,000 = $5,510,000
• Federal estate tax at 40% (top rate approximation): ≈ $2,204,000

Caution: Sunset Provision

The current high exemption ($13.99M) is set to revert to approximately $7M per individual after December 31, 2025, unless Congress acts. Estate planning before the sunset could be critically important for estates valued between $7M and $14M.

Common Mistakes to Avoid

• Ignoring state estate taxes — 12 states and DC have their own estate taxes with much lower exemptions (as low as $1M in Massachusetts and Oregon).
• Not using portability — A surviving spouse can use the deceased spouse's unused exemption if an estate tax return is filed timely — even if no tax is owed.
• Overlooking life insurance in the estate — Life insurance death benefits are included in the taxable estate if you own the policy. An ILIT (Irrevocable Life Insurance Trust) can remove this.

Frequently Asked Questions

What is the step-up in basis?

Assets inherited at death receive a step-up in cost basis to their fair market value at the date of death, eliminating embedded capital gains. This is a major tax benefit of inheriting assets rather than receiving them as gifts during life.

What is an inheritance tax vs. estate tax?

Estate tax is paid by the estate before distribution. Inheritance tax is paid by the beneficiary after receiving assets. The US has no federal inheritance tax, but 6 states do (Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania).

How can I reduce estate taxes?

Strategies include: gifting during your lifetime (up to $18,000/year per recipient in 2025 without gift tax), irrevocable trusts, charitable bequests, and family limited partnerships. Consult an estate planning attorney.

Conclusion

Estate tax planning is especially urgent given the potential 2026 exemption reduction. Use this calculator to estimate your estate's exposure, then work with an estate attorney to implement strategies that protect wealth for your heirs.

Related: Tax Calculator | Investment Calculator | Retirement Calculator | RMD Calculator