Federal Estate Tax Calculator

The most critical factor in estate tax planning is the "applicable exclusion amount"—the value of assets you can transfer without triggering the tax. In 2026, this amount is set to revert to a lower, pre-TCJA (Tax Cuts and Jobs Act) level, adjusted for inflation. This "sunset" provision dramatically changes the landscape for many families.

The key takeaway is the dramatic reduction in the exemption from its 2025 level of nearly $14 million. An estate that would have owed zero tax in 2025 could face a substantial tax bill in 2026 without proper planning. Married couples can combine their exemptions through "portability," effectively doubling the protected amount, but this requires a specific and timely election after the first spouse's death.

Before you can calculate potential tax, you must determine the value of your gross estate. The IRS takes a broad view, including nearly everything you own or have an interest in at the time of your death. Assets are typically valued at their fair market value, not what you originally paid for them.

Your gross estate generally includes:

• Financial Assets: Cash, savings accounts, stocks, bonds, mutual funds, and brokerage accounts.
• Retirement Accounts: The value of your 401(k)s, 403(b)s, traditional IRAs, and Roth IRAs. These accounts are also subject to income tax for your heirs (except Roths), creating a double-taxation potential. See the inherited IRA tax calculator for more on this.
• Real Estate: Your primary residence, vacation homes, and any investment properties you own.
• Business Interests: The value of any closely held businesses, partnerships, or sole proprietorships.
• Life Insurance Proceeds: If you owned the policy on your own life, the death benefit is included in your estate. This is a common planning pitfall.
• Personal Property: Valuables such as cars, boats, art, antiques, and jewelry.
• Annuities and Pensions: The value of certain survivor benefits from pensions or annuities may be included.
• Certain Trust Assets: Assets in trusts where you retained control or an interest (like a revocable living trust) are part of your estate.

Understanding the full scope of your gross estate is the first step in determining whether you are near the federal exemption threshold.

Your "taxable estate" is not your gross estate. The tax is calculated after several important deductions are subtracted. This calculator accounts for the three most common deductions, which can dramatically reduce or even eliminate your estate tax liability.

1. Debts and Expenses: Your estate can deduct your outstanding debts at the time of death. This includes mortgages, credit card balances, personal loans, and other liabilities. It also includes final expenses such as funeral costs, last medical bills, and the administrative costs of settling your estate (e.g., attorney, appraiser, and executor fees).
2. Marital Deduction: This is the most powerful estate tax deduction for married couples. You can leave an unlimited amount of assets to your surviving spouse (provided they are a U.S. citizen) completely free of estate tax. This doesn't avoid the tax forever—it defers it. The assets will be part of the surviving spouse's estate at their death, where they will be subject to the tax based on the exemption in that future year.
3. Charitable Deduction: If you leave money or property to a qualified charity in your will or trust, your estate can take a full deduction for the value of that gift. This is a powerful tool for philanthropic individuals to reduce their taxable estate while supporting causes they care about. For complex giving strategies, you might explore a charitable remainder trust calculator.

Properly accounting for these deductions is crucial. An estate valued at $10 million with $3 million in deductions would have a taxable estate of $7 million, potentially avoiding federal tax entirely under the 2026 exemption.

The calculator determines your potential estate tax by following the same sequence the IRS uses. It projects your estate's growth, subtracts deductions, and then applies the federal exemption and tax rate.

First, it projects the future value of your gross estate:

Projected Gross Estate = Current Estate Value × (1 + Annual Estate Growth Rate) ^ Years Until Death

Where:

• Current Estate Value = The total net value of your assets today.
• Annual Estate Growth Rate = The expected average annual growth of your estate.
• Years Until Death = The time horizon for your plan.

Next, it calculates the taxable estate before applying the main exemption:

Taxable Estate Before Exemption = Projected Gross Estate - Total Deductions

Where:

• Total Deductions = The sum of your debts, administrative expenses, marital deduction, and charitable bequests.

Finally, it calculates the potential federal estate tax owed:

Federal Estate Tax = (Taxable Estate Before Exemption - Applicable Exclusion Amount) × Federal Estate Tax Rate

Where:

• Applicable Exclusion Amount = The federal estate tax exemption for the year of death (projected at $7,000,000 for 2026).
• Federal Estate Tax Rate = The top marginal tax rate applied to the excess amount (40%).

This final number represents the estimated tax bill your estate would need to pay before assets can be fully distributed to your heirs.

This calculator focuses exclusively on the federal estate tax. A critical planning point is that many states have their own, separate death taxes with much lower exemption amounts. Your estate could be completely exempt from federal tax but still owe hundreds of thousands in state tax.

There are two types of state-level death taxes:

• Estate Tax: Paid by the estate itself before assets are distributed.
• Inheritance Tax: Paid by the beneficiaries who receive the assets. The tax rate often depends on the beneficiary's relationship to the deceased (spouses are usually exempt, while distant relatives pay the highest rates).

As of 2026, the following states impose one of these taxes:

*Maryland is the only state with both an estate and an inheritance tax.

If you live in one of these states, you must factor state taxes into your plan. State exemption amounts can be as low as $1 million, meaning many more families are affected at the state level than at the federal level. You can learn more about how states tax other retirement income with tools like the pension tax by state calculator.

What is the difference between an estate tax and an inheritance tax?

An estate tax is levied on the total value of a deceased person's estate before it is distributed to heirs. It is paid by the estate itself. An inheritance tax is levied on the assets received by a beneficiary, and the beneficiary is responsible for paying it. The federal government only has an estate tax.

How does estate tax exemption portability work for married couples?

Portability allows a surviving spouse to use any unused portion of their deceased spouse's federal estate tax exemption. For example, if the first spouse to die uses only $2 million of their $7 million exemption, the surviving spouse can add the unused $5 million to their own exemption, giving them a total of $12 million. This requires filing an estate tax return for the first spouse, even if no tax is due.

Is a gift tax the same as the estate tax?

They are two parts of a unified system. The gift tax applies to asset transfers made during your lifetime, while the estate tax applies to transfers at death. Taxable gifts you make above the annual exclusion amount reduce your lifetime gift and estate tax exemption. This prevents people from simply giving away all their assets tax-free just before death.

Are retirement accounts like 401(k)s and IRAs subject to estate tax?

Yes. The full value of your pre-tax and Roth retirement accounts is included in your gross estate for estate tax purposes. Heirs of pre-tax accounts (like a traditional IRA) also owe income tax on withdrawals, which can lead to significant tax erosion. Learning about tax-efficient withdrawal strategies is crucial for both you and your beneficiaries.

What are common strategies to reduce estate taxes?

Common strategies include making annual exclusion gifts, paying for tuition or medical expenses directly (which are exempt from gift tax), creating irrevocable trusts (like an ILIT for life insurance), and making charitable donations. Advanced planning often involves a combination of these tools tailored to your specific situation.

Who pays the estate tax—the estate or the beneficiaries?

The estate tax is paid by the estate from its available assets before any distributions are made to beneficiaries. This reduces the total amount of the inheritance. Beneficiaries do not pay the federal estate tax directly, though their inheritance is smaller as a result of it.

How is the value of an estate determined for tax purposes?

Assets are valued at their "fair market value" (FMV) on the date of death. This is the price the property would sell for on the open market. For assets that are hard to value, like a private business or unique art, the estate's executor will need to hire professional appraisers.

Understanding your potential estate tax liability is a critical first step. Use this calculator to see where you stand and model different scenarios. A change in your estate's growth rate or planned deductions can significantly alter the outcome.

Once you have an estimate, consider exploring related planning tools. See how different drawdown strategies affect your assets over time with a retirement drawdown calculator or evaluate how long your money might last under various conditions with the how long will my money last calculator. For those with significant assets in tax-deferred accounts, a Roth conversion calculator can help analyze strategies to reduce future tax burdens for you and your heirs.

Last updated: July 2026