US Estate Tax Calculator 2026

US federal estate tax is regulated by the Internal Revenue Code (IRC) Subtitle B Chapter 11. Due to the high unified credit exemption of $13.99 million per individual (2026 inflation-adjusted), only about 0.2% of US estates owe federal tax. This calculator determines taxable estate, applicable exemption, estate tax, state estate taxes (where applicable), and net inheritance after all taxes and costs.

Federal Estate Tax Rates 2026 (IRC §2001)

Progressive marginal rates up to 40%:

• First $10,000 over exemption: 18%
• $10,000-$20,000: 20%
• $20,000-$40,000: 22%
• $40,000-$60,000: 24%
• $60,000-$80,000: 26%
• $80,000-$100,000: 28%
• $100,000-$150,000: 30%
• $150,000-$250,000: 32%
• $250,000-$500,000: 34%
• $500,000-$750,000: 37%
• $750,000-$1,000,000: 39%
• Over $1,000,000: 40% (effective marginal rate for large estates)

Unified Credit Exemption 2026

• Individual exemption: $13.99 million (2026 TCJA temporary extension through 12/31/2025 reverting to ~$7M)
• Married couple (with portability election): $27.98 million combined
• Sunset after 2025: Without Congressional action, exemption reverts to pre-TCJA ~$7 million per individual starting 2026
• Annual gift exclusion: $18,000 per recipient per donor (2025; indexed for inflation 2026)
• Portability: unused exemption transfers to surviving spouse via Form 706

State Estate Taxes

In addition to federal, 17 states levy their own estate tax with lower exemptions:

• Massachusetts: $2M exemption, up to 16%
• Oregon: $1M exemption, up to 16%
• Washington: $2.193M exemption, up to 20%
• New York: $7.12M exemption, up to 16% (tax cliff over 105% exemption)
• Illinois: $4M exemption, up to 16%
• Maryland: $5M + state inheritance tax (only state with both)
• Connecticut: $13.61M, up to 12% (matches federal)
• DC, HI, ME, MN, RI, VT: varying $1M-$3M exemptions

State Inheritance Taxes (paid by recipient)

6 states levy inheritance tax (taxed to heir, not estate):

• Iowa: 5-15% (phasing out 2025)
• Kentucky: 4-16%, Class A (spouse/children) exempt
• Maryland: 10% (spouse/lineal descendants exempt)
• Nebraska: 1% spouse, up to 18% distant relatives
• New Jersey: up to 16% (repealed estate tax 2018)
• Pennsylvania: 0-15% (spouse 0%, children 4.5%)

What's Included in Gross Estate

• Real estate at fair market value at date of death
• Bank accounts, CDs, money market: at date-of-death balance
• Stocks and bonds: stepped-up basis to FMV at death
• Retirement accounts (IRA, 401k): included in gross estate
• Life insurance proceeds: IF insured retained incidents of ownership
• Business interests: FMV with possible valuation discounts
• Annuities: commuted value
• Personal property: vehicles, jewelry, art, collectibles
• Transfers within 3 years of death: included (IRC §2035)

Step-Up Basis Benefit

One of the most valuable inheritance benefits: inherited assets receive a step-up in basis to fair market value at date of death. This means heirs avoid capital gains tax on appreciation that occurred during decedent's lifetime. Example: stock bought at $10,000, worth $100,000 at death → heir's basis is $100,000. If sold immediately, zero capital gains. If held and sold later at $120,000, only $20,000 capital gains.

Planning Strategies

• Annual gifting: $18,000 per recipient without reducing lifetime exemption (can gift to unlimited recipients)
• Direct medical/education payments: unlimited if paid directly to provider (§2503(e))
• Irrevocable Life Insurance Trust (ILIT): removes life insurance from estate
• Qualified Personal Residence Trust (QPRT): transfers home at reduced gift tax value
• Grantor Retained Annuity Trust (GRAT): transfers appreciation to heirs tax-free
• Family Limited Partnership (FLP): valuation discounts 25-40%
• Charitable Remainder Trust (CRT): income stream + charitable deduction
• 529 Plans: up to $90,000 lump sum (5-year averaging) per beneficiary gift tax-free

Example: $20M Estate with Single Married Couple

• Total gross estate: $20,000,000
• Marital deduction (unlimited to spouse): if 100% to spouse, no estate tax
• If 50/50 split with bypass trust: $10M to spouse (tax-free) + $10M to bypass trust
• Bypass trust exemption used: $10M of $13.99M unified credit
• Federal estate tax: $0
• Remaining exemption of $3.99M portable to surviving spouse (via Form 706)

Example: $20M Estate Single Individual

• Gross estate: $20,000,000
• Unified credit exemption: -$13,990,000
• Taxable estate: $6,010,000
• Federal estate tax at 40%: $2,404,000
• Net to heirs: $17,596,000
• Plus applicable state estate tax (if state has one)

Filing Requirements

• Form 706: required if gross estate exceeds $13.99M (2026) or surviving spouse wants portability
• Due date: 9 months from date of death, 6-month extension available
• State returns: separate filing in 17 states with estate tax
• Executor responsibility: personally liable for estate tax if distributes before tax paid
• Form 8971: basis consistency reporting for beneficiaries (if Form 706 required)

Frequently Asked Questions (FAQ)

Do I pay tax on inheritance in the US?

No federal income tax on inherited money or property. Federal estate tax is paid by the estate (not heir) only if exceeds $13.99M (2026). Only 6 states have inheritance tax paid by recipient: IA, KY, MD, NE, NJ, PA. For most Americans, inherited money is tax-free.

What's step-up basis?

Inherited assets are valued at fair market value on date of death, erasing capital gains accumulated during decedent's lifetime. Example: grandfather bought house in 1970 for $50,000, worth $500,000 at death. Heir's basis is $500,000, not $50,000. If sold at $500,000, zero capital gains. This is extremely valuable and why keeping appreciated assets in family is recommended.

What's the gift tax exemption?

Annual exclusion: $18,000 per recipient per donor (2025, indexed). Unlimited recipients. Married couple can gift $36,000 per recipient (split gifts). Gifts above this use lifetime exemption ($13.99M unified with estate). Direct medical and tuition payments unlimited if paid to provider directly.

Does life insurance count as estate?

Only if insured had "incidents of ownership" (could change beneficiary, take loan, etc.). To exclude: use Irrevocable Life Insurance Trust (ILIT). Proceeds go to trust, not estate. Must fund ILIT at least 3 years before death (IRC §2035 three-year rule).

How to minimize estate tax?

• Annual gifting: $18K/recipient
• Pay for medical/tuition directly: unlimited exemption
• Use exemption during lifetime while high (before 2025 sunset)
• ILIT for life insurance
• GRAT, CRT, FLP for appreciating assets
• Marital deduction and portability
• Charitable giving: 100% deduction

When should I file Form 706?

Required if: (

• gross estate >$13.99M (2026), (
• surviving spouse wants portability election, (
• generation-skipping transfers >$13.99M, (
• state estate tax requires it. Due 9 months from death, 6-month extension (Form 4768). Failure to file: $500/month penalty + 5% per month of unpaid tax

What happens to retirement accounts?

IRA, 401(k) included in gross estate at full balance. Heirs (other than spouse) subject to 10-year distribution rule under SECURE Act 2019. Spouse can roll into own IRA and defer distributions until age 73. Inherited IRA has no step-up basis - heirs pay ordinary income tax on distributions.

Updated July 2026