What Is Estate Tax and How Is It Calculated?
Estate tax is a federal tax levied on the transfer of a deceased person's assets to their heirs, calculated on the value of the estate that exceeds a lifetime exemption. Under the One Big Beautiful Bill Act (OBBBA), the Internal Revenue Service set the 2026 federal exemption at $15,000,000 per person, or $30,000,000 for a married couple using portability.
The federal estate tax formula, set out in IRC Section 2001(c), applies graduated rates from 18% up to a top rate of 40%, with the top bracket beginning at just $1,000,000 of taxable value. Because the 2026 exemption ($15,000,000) is far above that $1,000,000 threshold, every dollar actually subject to tax lands in the top bracket — in practice, Estate Tax = (Taxable Estate − Exemption) × 40%.
According to the IRS, estates valued below the applicable exemption owe no federal estate tax and generally are not required to file Form 706. The Tax Foundation notes that fewer than 0.2% of estates owed any federal estate tax in recent years, since the exemption has risen well above the value of a typical household.
How to Use This Estate Tax Calculator
Enter your gross estate value along with your marital status and any deductions, and the estate tax calculator updates your estimated federal tax instantly. Here is what each field means:
- Gross Estate Value: The fair market value of everything you own at death — real estate, investment accounts, retirement accounts, life insurance proceeds you control, and business interests.
- Marital Status: A surviving spouse can elect portability, carrying over any unused exemption from the deceased spouse, which effectively doubles the exemption to $30,000,000 for 2026.
- Debts & Funeral Expenses: Outstanding mortgages, loans, and final expenses, which reduce the gross estate to arrive at the taxable estate.
- Charitable Bequests: Assets left to a qualifying charity are fully deductible and removed from the taxable estate before the exemption is applied.
- Lifetime Taxable Gifts Already Used: Gift and estate tax share one unified exemption, so taxable gifts made during life (above the annual exclusion, $19,000 per recipient in 2026) reduce the exemption remaining at death.
This estate tax calculator estimates U.S. federal tax only. Seventeen states and the District of Columbia levy their own separate estate or inheritance tax with exemptions as low as $1,000,000 — far below the federal threshold — so an estate that owes no federal tax can still owe state tax.
What Your Estate Tax Exemption Means by Filing Situation
The exemption amount and effective marginal rate depend on marital status and how much of the unified lifetime exemption has already been used through taxable gifts.
| Situation | 2026 Exemption | Tax on Amount Above Exemption |
|---|---|---|
| Single individual | $15,000,000 | 40% flat (top IRC §2001(c) bracket) |
| Married couple, portability elected | $30,000,000 | 40% flat (top IRC §2001(c) bracket) |
| Assets left to surviving spouse | Unlimited | 0% — unlimited marital deduction, not modelled here |
| Assets left to qualifying charity | Unlimited | 0% — fully deductible |
Frequently Asked Questions
What is the estate tax exemption for 2026?
The federal estate tax exemption for 2026 is $15,000,000 per person, made permanent by the One Big Beautiful Bill Act and indexed for inflation going forward. A married couple can shelter up to $30,000,000 combined by electing portability of the first spouse's unused exemption on a timely filed Form 706.
How accurate is this estate tax calculator?
This calculator applies the current federal exemption and the effective 40% top marginal rate that governs virtually every taxable estate under IRC §2001(c). It does not model the unlimited marital deduction, state estate or inheritance taxes, generation-skipping transfer tax, valuation discounts, or trust strategies, so treat the result as an estimate and consult an estate planning attorney or CPA before making decisions.
What is the difference between estate tax and inheritance tax?
Estate tax is paid by the deceased person's estate before assets are distributed, based on the total value of the estate. Inheritance tax, levied by a handful of states including Pennsylvania, Kentucky, and Nebraska, is paid by the individual heir on what they personally receive, often at a rate that depends on their relationship to the deceased.
How do I reduce my estate tax liability?
Common strategies include making annual exclusion gifts ($19,000 per recipient in 2026) during your lifetime, electing portability so a surviving spouse inherits any unused exemption, leaving assets to a spouse or charity to claim the unlimited deduction, and using irrevocable trusts to remove future appreciation from the taxable estate. Each strategy has tradeoffs, so work with an estate planning attorney.
