Federal Estate Tax Calculator

A federal estate tax calculator determines whether a deceased person's estate owes federal estate tax and calculates the amount due. The federal estate tax applies to the transfer of property at death, with a unified credit that effectively exempts estates below a certain threshold from taxation. For 2024, the federal estate tax exemption is $13.61 million per individual ($27.22 million for married couples using portability), meaning estates valued below this amount owe zero federal estate tax. Estates exceeding the exemption are taxed at graduated rates reaching a top rate of 40% on the amount above the exemption. The federal estate tax has a long and politically contentious history in American tax policy. First enacted in 1916 to fund World War I, the estate tax has been modified dozens of times, with exemption levels ranging from $60,000 (1997) to the current $13.61 million (2024). The Tax Cuts and Jobs Act of 2017 roughly doubled the exemption from $5.49 million to $11.18 million (indexed for inflation), but this increase is scheduled to sunset after December 31, 2025. Unless Congress acts, the exemption will revert to approximately $7 million (adjusted for inflation) in 2026, which would bring an estimated 10 times more estates into the taxable range. The estate tax is distinct from the inheritance tax (which is imposed by certain states on the beneficiaries who receive assets) and the income tax (which generally does not apply to inherited assets due to the stepped-up basis rule). Under stepped-up basis, heirs receive inherited assets with a cost basis equal to the fair market value at the date of death, eliminating capital gains tax on appreciation during the decedent's lifetime. This provision is one of the most significant tax benefits in the Internal Revenue Code and is frequently debated in tax reform discussions. The federal estate tax affects a very small percentage of decedents. The Tax Policy Center estimates that approximately 4,100 estate tax returns were filed for 2023 decedents (out of approximately 2.8 million deaths), and only about 2,500 of those owed any tax. However, the estates that are subject to the tax tend to involve complex planning, significant wealth, and substantial professional fees for attorneys, accountants, and appraisers. Estate planning to minimize or eliminate the estate tax is a multi-billion dollar professional services industry.

Calkulon makes complex calculations simple — built for students and everyday problem-solvers.

1. 1Calculate the gross estate, which includes the fair market value of everything the deceased person owned or had an interest in at the date of death. This encompasses real estate, bank accounts, investment accounts (stocks, bonds, mutual funds), retirement accounts (IRAs, 401(k)s), life insurance proceeds (if the deceased owned the policy or had incidents of ownership), business interests (closely held corporations, partnerships, LLCs), personal property (vehicles, jewelry, art, collectibles), and any assets transferred within three years of death that were subject to retained interests. Joint property is included based on the decedent's ownership percentage. The gross estate valuation date is generally the date of death, though the executor can elect an alternate valuation date (six months after death) if it would reduce the estate's value.
2. 2Subtract allowable deductions to arrive at the taxable estate. The most significant deductions include: the marital deduction (unlimited for assets passing to a surviving spouse who is a U.S. citizen), the charitable deduction (unlimited for assets passing to qualified charitable organizations), funeral and burial expenses, estate administration expenses (executor fees, attorney fees, accounting fees, appraisal costs), debts owed by the decedent at death (mortgage, credit cards, loans), and state death taxes paid. The marital deduction is the most powerful estate planning tool because it allows unlimited transfers between spouses tax-free, effectively deferring estate tax until the surviving spouse's death.
3. 3Apply the graduated estate tax rate schedule to the taxable estate. The federal estate tax uses a unified rate schedule that starts at 18% on the first $10,000 of taxable transfers and increases in brackets up to 40% on amounts exceeding $1,000,000. However, the unified credit ($5,389,800 for 2024, which shelters $13.61 million) effectively eliminates tax on estates below the exemption amount. The practical effect is that only the amount exceeding $13.61 million is taxed, and the effective rate on that excess approaches 40% for large estates. The same rate schedule applies to both estate and gift taxes under the unified transfer tax system.
4. 4Apply available credits to reduce the tentative tax. The unified credit ($5,389,800 for 2024) is the primary credit and effectively exempts the first $13.61 million from tax. Additional credits include: the credit for state death taxes (limited to the amount of state estate taxes actually paid), the credit for tax on prior transfers (for assets taxed in a previous estate within the past 10 years), the credit for foreign death taxes (for assets situated in foreign countries that were taxed by the foreign jurisdiction), and the credit for gift taxes paid on pre-1977 gifts. The deceased spousal unused exclusion (DSUE or portability) allows a surviving spouse to use the deceased spouse's unused exemption amount, potentially doubling the available exemption to $27.22 million.
5. 5File Form 706 (United States Estate and Generation-Skipping Transfer Tax Return) with the IRS. Form 706 is due nine months after the date of death, with an automatic six-month extension available by filing Form 4768. The return must be filed if the gross estate plus adjusted taxable gifts exceeds the filing threshold ($13.61 million for 2024 decedents). Even estates below the threshold may need to file to elect portability of the DSUE amount to the surviving spouse. Form 706 requires detailed schedules listing all assets (Schedules A through I), deductions (Schedules J through O), and tax computation. The return must include appraisals for real estate, closely held business interests, and significant personal property.
6. 6Pay the estate tax due, which is generally due at the same time as the return (nine months after death, or fifteen months with extension). The executor is personally liable for the estate tax if assets are distributed before the tax is paid. Several payment options exist for estates with liquidity challenges: installment payments under IRC Section 6166 (for estates where a closely held business constitutes more than 35% of the adjusted gross estate, allowing tax to be paid over up to 14 years with favorable interest rates), loans secured by estate assets, or selling estate assets to generate cash. The IRS can also accept bonds or other security in lieu of immediate payment.
7. 7Consider the generation-skipping transfer (GST) tax, which is an additional tax on transfers to beneficiaries who are two or more generations below the transferor (typically grandchildren). The GST tax has its own exemption ($13.61 million for 2024, same as the estate tax exemption) and is imposed at a flat rate of 40% on transfers exceeding the exemption. The GST tax was designed to prevent wealthy families from avoiding estate tax at each generation by skipping directly to grandchildren or later generations. The GST exemption can be allocated to trusts that benefit multiple generations, such as dynasty trusts.

• !Failing to Elect Portability on the First Spouse's Estate: The deceased spousal unused exclusion (DSUE) amount does not transfer automatically to the surviving spouse. The executor must file a timely Form 706 and affirmatively elect portability, even if no tax is owed and no return would otherwise be required. Many families with estates below the exemption threshold skip the Form 706 filing, permanently forfeiting millions in unused exemption. The IRS has provided late portability election relief (Revenue Procedure 2022-32), but the simplified procedure requires filing within five years of death. Estate planners strongly recommend filing Form 706 for all married decedents to preserve flexibility.
• !Undervaluing Assets on the Estate Tax Return: The IRS closely scrutinizes asset valuations on Form 706, particularly for hard-to-value assets like closely held business interests, real estate, art collections, and intellectual property. Using unsupported or aggressive valuations invites audit and potential penalties. Qualified appraisals by credentialed appraisers (ASA, MAI, or equivalent) are essential for non-publicly-traded assets. Valuation discounts for lack of marketability (DLOM) and lack of control (DLOC) on minority interests in family entities are legitimate but must be well-documented and reasonable (typically 15-35% combined). The IRS has successfully challenged excessive discounts in numerous Tax Court cases.
• !Not Planning for the 2026 Exemption Sunset: The current $13.61 million exemption is scheduled to revert to approximately $7 million (inflation-adjusted) after December 31, 2025, unless Congress extends the Tax Cuts and Jobs Act provisions. Families with estates between $7 million and $13.61 million who do not take action before 2026 may face unexpected estate tax liability. Strategies to lock in the higher exemption include making large lifetime gifts (the IRS has confirmed in final regulations that gifts made under the higher exemption will not be clawed back if the exemption decreases) and funding irrevocable trusts before the sunset date.