US Federal Estate Tax Guide
The US federal estate tax is a tax on your right to transfer property at your death. It is based on the value of your "taxable estate." This guide provides a simplified overview.
Key Concepts
- Gross Estate: The fair market value of everything you own or have certain interests in at the time of death. This can include real estate, stocks, bonds, business interests, cash, collectibles, and the face value of life insurance policies you owned.
- Taxable Estate: Your Gross Estate minus certain allowable deductions (see below).
- Applicable Exclusion Amount (Federal): The amount of your estate (or gifts made during life) that can pass tax-free. For the 2025 tax year, this is a very high amount per individual, indexed for inflation.
- Portability: Allows a surviving spouse to use any unused portion of their deceased spouse's federal estate tax exclusion amount.
- Federal Estate Tax Rate: A progressive rate applies to the value of the taxable estate that exceeds the applicable exclusion amount. The top rate is currently 40%.
Common Deductions from the Gross Estate
Certain deductions can reduce the value of your Gross Estate to arrive at the Taxable Estate:
- Marital Deduction: Transfers to a surviving spouse who is a U.S. citizen.
- Charitable Deduction: Transfers to qualified charities.
- Debts and Administration Expenses: Funeral expenses, probate costs, and outstanding debts of the deceased.
Applicable Exclusion Amount (2025) & Future Uncertainty
For the 2025 tax year, the federal Applicable Exclusion Amount is $13,610,000 per individual. This means that for most estates, no federal estate tax will be owed.
Important Note: The significant increase in the exclusion amount under the Tax Cuts and Jobs Act (TCJA) is scheduled to expire after December 31, 2025. Unless Congress acts, the exclusion amount is expected to revert to approximately $7 million per individual (indexed for inflation from 2011) starting in 2026. This potential change could significantly impact many more estates.
State Estate and Inheritance Taxes
Some US states impose their own estate tax or inheritance tax (a tax on the recipient of property). These are separate from the federal estate tax. This tool does not account for state taxes.
Disclaimer: This guide provides simplified, general information about US federal estate tax for educational purposes. It is not exhaustive and does not cover all rules, exceptions, or state-level taxes. Estate planning and taxation are complex. Consult with a qualified estate planning attorney or tax professional for accurate information and advice specific to your situation.
Federal Estate Tax Estimate (Simplified)
Enter estimated values below to see if your estimated taxable estate might exceed the federal exclusion amount. This is a simplified estimate using the 2025 exclusion.
*Value of all assets at death.
*Sum of marital, charitable, debts, administration expenses, etc.
Enter estimated values above and click "Calculate Estimate".
Disclaimer: This is a simplified estimate for US federal estate tax using the 2025 Applicable Exclusion Amount ($13,610,000). It does **NOT** calculate your actual tax liability. The exclusion amount is scheduled to significantly decrease after 2025. This tool does not account for lifetime gifts, gift tax, state estate/inheritance taxes, or all tax complexities. Consult a qualified tax or estate planning professional for accurate advice.