Calculate federal estate tax liability before and after the 2026 TCJA exemption sunset. Includes planning strategies, and portability guide | Calculator4U
Estimate potential estate tax liability.
The Estate Tax Calculator helps you estimate federal estate tax liability on your estate. The federal estate tax, sometimes called the "death tax," applies to the transfer of property upon death when the total value exceeds the lifetime exemption amount. Understanding estate tax is essential for wealth preservation and ensuring your heirs receive the maximum inheritance possible.
With the Tax Cuts and Jobs Act (TCJA) provisions set to sunset on January 1, 2026, estate tax planning has become more critical than ever. The exemption is projected to drop from approximately $14 million to around $7 million per person—potentially exposing millions of estates to significant tax liability for the first time in years.
Gross Estate = Total value of all assets (real estate, investments, life insurance, retirement accounts, business interests)
Deductions = Debts, funeral expenses, charitable bequests, marital deduction for transfers to surviving spouse
Exemption = Federal lifetime exemption amount (varies by year; see table below)
Tax Rate = 18% to 40% progressive rate (40% on amounts over $1 million above exemption)
| Tax Year | Individual Exemption | Married Couple (with Portability) | Top Marginal Rate | Annual Gift Exclusion |
|---|---|---|---|---|
| 2024 | $13.61 million | $27.22 million | 40% | $18,000 |
| 2025 | $13.99 million | $27.98 million | 40% | $19,000 |
| 2026+ (Post-Sunset) | ~$7 million | ~$14 million | 40% | ~$19,000 (est.) |
Note: 2026 figures are projections based on TCJA sunset provisions. The exemption will revert to 2017 levels (~$5.49 million) adjusted for inflation. Amounts are indexed annually for inflation by the IRS.
Scenario: Single individual with $15 million estate in 2025
Same estate in 2026: With ~$7 million exemption, taxable amount = $8 million, potential tax = $3.2 million—a difference of $2.8 million!
Implement these strategies before the 2026 exemption sunset to minimize estate tax liability:
1. Maximize Lifetime Gifting: Use the annual gift exclusion ($18,000-$19,000 per recipient) to remove assets from your estate tax-free. Married couples can gift $36,000-$38,000 per recipient annually. Gifts reduce your taxable estate and transfer future appreciation to heirs.
2. Spousal Lifetime Access Trusts (SLATs): Transfer assets to an irrevocable trust for your spouse's benefit while using your current high exemption. Locks in the 2025 exemption amount before the 2026 decrease while maintaining indirect family access to funds.
3. Irrevocable Life Insurance Trusts (ILITs): Life insurance proceeds paid to your estate are taxable. An ILIT holds the policy outside your estate, providing tax-free death benefits to beneficiaries while potentially covering any estate tax liability.
4. Grantor Retained Annuity Trusts (GRATs): Transfer appreciating assets to a trust while retaining an annuity. Any growth above the IRS hurdle rate (7520 rate) passes to heirs gift-tax-free. Ideal for assets expected to appreciate significantly.
5. Charitable Remainder Trusts (CRTs): Donate assets to a CRT, receive income for life, reduce your taxable estate, and benefit your favorite charity. Provides current income tax deduction plus estate tax reduction.
6. Family Limited Partnerships (FLPs): Transfer business or investment assets to an FLP, then gift limited partnership interests at discounted values due to lack of marketability and control discounts (typically 20-35%).
7. Portability Election: If your spouse dies first, file IRS Form 706 within 9 months to claim their unused exemption. This "portability" allows surviving spouses to use up to $27.98 million (2025) in combined exemptions.
Mistake: Assuming estate tax doesn't apply to you. Reality: With the 2026 exemption dropping to ~$7 million, many more estates will be taxable. Include life insurance proceeds in your calculation—a $2 million policy plus a $6 million estate creates a taxable estate.
Mistake: Not claiming portability after a spouse's death. Fix: File IRS Form 706 within 9 months (with 6-month extension available) even if no estate tax is owed. This preserves the deceased spouse's unused exemption for the survivor.
Mistake: Waiting until 2026 to implement estate planning strategies. Reality: Once the exemption drops, you cannot retroactively use the higher amount. Irrevocable trusts and large gifts should be completed by December 31, 2025.
Mistake: Ignoring state estate and inheritance taxes. Reality: 18 states plus Washington DC have separate estate or inheritance taxes. States like Massachusetts and Oregon have exemptions as low as $1 million. Combined federal and state rates can exceed 50%.
Mistake: Failing to update beneficiary designations. Fix: Retirement accounts and life insurance pass outside your will. Ensure beneficiaries are current and consider trust beneficiaries for estate tax planning and asset protection.
| State | Tax Type | Exemption Amount | Top Rate |
|---|---|---|---|
| Massachusetts | Estate Tax | $1 million | 16% |
| Oregon | Estate Tax | $1 million | 16% |
| Washington | Estate Tax | $2.193 million | 20% |
| New York | Estate Tax | $6.94 million | 16% |
| Maryland | Both | $5 million (estate) | 16%/10% |
| Pennsylvania | Inheritance Tax | N/A (based on heir) | 4.5%-15% |
Note: This is not a complete list. Consult your state's tax authority for current rules. Some states have "cliff" provisions where exceeding the exemption by even $1 can tax the entire estate.
Authoritative Sources & References: Estate tax calculations are based on IRS Form 706 instructions and Internal Revenue Code Sections 2001-2210. Exemption amounts are published annually in IRS Revenue Procedures. The 2026 sunset provisions are codified in the Tax Cuts and Jobs Act of 2017 (P.L. 115-97), Section 11061. State tax information is sourced from respective state departments of revenue. For personalized estate planning advice, consult a qualified estate planning attorney, CPA, or financial advisor. Calculator updated January 2026.
The 2026 federal estate tax exemption is projected to drop significantly to approximately $7 million per individual ($14 million for married couples) when the Tax Cuts and Jobs Act provisions sunset on January 1, 2026. This represents a dramatic decrease from the 2025 exemption of $13.99 million. For estates valued between $7-14 million, this change could result in new estate tax liability of 40% on amounts exceeding the exemption. Estate planning strategies like lifetime gifting, irrevocable trusts, and charitable giving should be implemented before the sunset date to lock in the higher exemption amounts.
The federal estate tax uses a progressive rate structure with rates ranging from 18% to 40%. The top marginal rate of 40% applies to taxable estates exceeding $1 million over the exemption threshold. The calculation formula is: Estate Tax = (Gross Estate Value - Deductions - Exemption Amount) × Applicable Tax Rate. In 2025, estates under $13.99 million (single) or $27.98 million (married with portability) pay zero federal estate tax. For 2026, when the exemption drops to ~$7 million, estates valued at $10 million could face $1.2 million in federal estate taxes. Additionally, 18 states plus Washington DC impose separate estate or inheritance taxes with exemptions as low as $1 million.
Effective estate tax reduction strategies include: (1) Annual exclusion gifting—give up to $18,000 per recipient ($36,000 for married couples) tax-free annually, removing assets and future appreciation from your estate; (2) Irrevocable Life Insurance Trusts (ILITs)—exclude life insurance proceeds from your taxable estate; (3) Grantor Retained Annuity Trusts (GRATs)—transfer appreciating assets to heirs with minimal gift tax; (4) Qualified Personal Residence Trusts (QPRTs)—transfer your home at reduced gift tax value; (5) Charitable Remainder Trusts (CRTs)—receive income during life while benefiting charity and reducing estate; (6) Spousal Lifetime Access Trusts (SLATs)—lock in the high exemption before 2026 while maintaining family access; (7) Dynasty Trusts—transfer wealth across multiple generations while avoiding estate tax at each level. Consult an estate planning attorney to implement these strategies before the 2026 exemption sunset.
Fewer than 1% of US estates currently owe federal estate tax. In 2025, only estates exceeding $13.99 million per individual ($27.98 million for married couples using portability) are subject to federal estate tax. The IRS reports approximately 4,000–5,000 federal estate tax returns are filed annually that result in actual tax owed. After the 2026 TCJA sunset drops the exemption to approximately $7 million, an estimated 2–3% of estates — roughly 20,000–25,000 per year — will become newly taxable. Transfers to a surviving US citizen spouse are completely exempt under the unlimited marital deduction regardless of estate size. Federal estate tax only applies when assets pass to children, other relatives, friends, or non-spouse beneficiaries.
Portability allows a surviving spouse to use the deceased spouse's unused federal estate tax exemption (DSUE). If your spouse dies in 2025 having made no taxable gifts, their full $13.99 million exemption is "portable" to you — potentially giving you a combined exemption of $27.98 million. To claim portability, the executor must file IRS Form 706 (United States Estate Tax Return) within 9 months of the decedent's death. A 6-month extension is available by filing IRS Form 4768. Portability is not automatic — it must be actively elected on a timely Form 706 even if no estate tax is owed. Failure to file within the deadline permanently forfeits the DSUE. The IRS provides a simplified late portability election procedure for estates that did not timely file — consult an estate attorney immediately if you missed the deadline.
Eighteen states plus Washington DC impose their own estate or inheritance taxes in addition to the federal tax. States with estate taxes (on the decedent's estate): Massachusetts and Oregon ($1 million exemption, 16% top rate), Washington state ($2.19 million, 20% top rate), New York ($6.94 million, 16% top rate), Maryland ($5 million, 16% top rate), and others. States with inheritance taxes (on what beneficiaries receive): Pennsylvania (4.5–15% depending on relationship), Iowa (being phased out), Nebraska, Maryland (both types), and Kentucky. New Jersey eliminated its estate tax in 2018 but retains an inheritance tax. States with cliff provisions — Massachusetts and Oregon — tax the entire estate once it exceeds the exemption by even $1, creating a particularly aggressive effective rate near the threshold. No federal deduction is available for state estate taxes paid. Combined federal and state effective rates can exceed 50% for large estates in high-tax states.
Yes — life insurance death benefits are included in your gross estate for federal estate tax purposes if you owned the policy, had the power to change beneficiaries, or the proceeds were paid to your estate. This surprises many families: a $2 million life insurance policy combined with a $6 million investment portfolio creates a $8 million gross estate — $1 million above the projected 2026 exemption and subject to $400,000 in federal estate tax. The solution is an Irrevocable Life Insurance Trust (ILIT): the trust owns the policy rather than you personally, keeping the death benefit out of your taxable estate. The trust must be created and funded at least 3 years before death; policies transferred to an existing ILIT within 3 years of death are "pulled back" into the estate under IRC Section 2035. ILITs must be established well before they are needed — not as a last-minute planning tool.