Estate Tax Calculator

Death and taxes, as they say. And sometimes both at once. The federal estate tax is one of the most politically contentious and most misunderstood parts of the American tax code. Most people will never owe a dollar of it. But for those who might, the potential bills run into millions — which is exactly why estate planning conversations happen years, even decades, before they're actually needed.

State Estate Taxes Add Another Layer

Federal estate tax is only part of the story. Twelve states and the District of Columbia have their own estate taxes — with exemptions often far lower than the federal threshold. Massachusetts and Oregon, for example, have estate tax exemptions of just $1 million. A $2 million estate that owes zero federal estate tax could owe $100,000 or more in Massachusetts estate tax.

Washington state has the highest top estate tax rate among states at 20%, applying to the largest estates. Maryland has both an estate tax and an inheritance tax. The specific state rules depend on where the deceased was domiciled at death — not necessarily where they owned property, though some states try to tax out-of-state property too.

So even if you're well under the federal exemption, your state's rules are worth understanding. An estate attorney in your state can tell you exactly where the thresholds fall and what planning strategies apply locally.

When to Start Planning

The frustrating truth about estate planning is that the best strategies require time to work. Annual gifting needs years to meaningfully reduce a large estate. Trusts need to be established, funded, and operational. Life insurance needs to be in force. None of this happens in an emergency.

The right time to think about estate taxes is when you start accumulating serious wealth — well before the estate tax could actually apply. Because once someone passes away, the planning options essentially disappear. What remains is just math: calculating the tax, figuring out which assets get sold to pay it, and dealing with the aftermath of a situation that careful planning could have dramatically improved.

Run the estimate now. Know where you stand relative to the exemption. And if the number is closer than you'd like, that's exactly the information you need to have an informed conversation with an estate planning attorney.

What the Estate Tax Actually Is

The federal estate tax is a tax on the right to transfer property at death. It applies to the total value of everything you own — real estate, investments, business interests, life insurance proceeds, retirement accounts, personal property — minus certain deductions. Whatever remains above the exemption threshold gets taxed at rates starting at 18% and climbing to 40%.

Here's the thing: the exemption is enormous. For 2024, the federal estate tax exemption is $13,610,000 per individual. A married couple can combine their exemptions to shelter $27,220,000 through what's called the "portability" election. That means the overwhelming majority of Americans — roughly 99.8% — will never pay federal estate tax regardless of how much they accumulate. The estates that do pay it are genuinely large.

But "large" is relative. A business owner who built a regional manufacturing company worth $25 million, a farmer who owns 2,000 acres worth $20 million, or a couple in a high-cost city who accumulated $15 million in real estate and investments — these are people who exist outside the ultra-wealthy category but still face estate tax exposure. And for them, the numbers get serious very quickly.

How the Calculation Works

Start with the gross estate: the total fair market value of everything the deceased owned or had an interest in at death. Then subtract allowable deductions. The unlimited marital deduction lets you pass everything to a surviving spouse estate-tax-free (assuming the spouse is a US citizen). Charitable bequests are fully deductible. Debts, mortgages, and estate administration expenses reduce the taxable estate as well.

What remains after deductions is the "taxable estate." Then you add back any taxable gifts made during the person's lifetime — gifts that used up part of the lifetime exemption. The combined number gets compared to the available exemption, and anything above that threshold gets taxed.

The tax rates on the excess are graduated, starting at 18% and reaching 40% fairly quickly. The top 40% rate applies to all amounts over $1 million above the exemption. So an estate of $15,610,000 — exactly $2 million above the 2024 exemption — would owe 40% of $2 million, or $800,000 in federal estate tax. Not a small number.

Related Calculators

• Gift Tax Calculator
• Income Tax Calculator

The Sunset Problem Looming in 2026

Here's what many people aren't aware of: the current generous exemption amount is temporary. The Tax Cuts and Jobs Act of 2017 doubled the exemption from roughly $5 million to roughly $10 million (indexed for inflation, now at $13.61 million). But those provisions are scheduled to sunset on January 1, 2026, unless Congress acts to extend them.

If the sunset happens, the exemption drops back to approximately $6–7 million per person. For couples who currently have no estate tax exposure, a sudden exemption cut could put them in taxable territory overnight. Someone with a $14 million estate and no estate plan in 2025 might owe nothing. The same person in 2026 might owe several hundred thousand dollars.

Robert, a 71-year-old retired physician in Phoenix, built a $16 million estate over his career through savings, a vacation property in Sedona, and a commercial real estate investment. Today, between his exemption and his wife's, they're comfortably under the combined threshold. If the sunset reduces the per-person exemption to $7 million, their combined exposure changes drastically. This is exactly why estate attorneys started having urgent conversations with clients in 2024 and 2025.

Strategies That Actually Reduce Estate Taxes

The most straightforward strategy: annual gifting. The annual gift tax exclusion lets each person give up to $18,000 (in 2024) to any number of recipients per year without touching their lifetime exemption. A couple with three children and six grandchildren can transfer $324,000 per year completely tax-free. Over 10 years, that's $3.24 million removed from the taxable estate.

Irrevocable life insurance trusts (ILITs) keep life insurance proceeds out of the taxable estate. Normally, if you own a life insurance policy, the death benefit counts in your estate. An ILIT holds the policy instead, and the proceeds flow to beneficiaries without being included in your estate — effectively providing liquidity to pay any estate taxes owed without adding to the taxable total.

Grantor retained annuity trusts (GRATs), charitable remainder trusts, family limited partnerships, and qualified personal residence trusts all represent more sophisticated strategies that work in specific situations. The right approach depends on the composition of the estate — whether it's mostly liquid assets, illiquid business interests, real estate, or a combination.