What this calculator does
This tool helps you estimate the federal estate tax you or your heirs might owe when an estate exceeds the current lifetime exemption. Estate tax (sometimes called the "death tax") applies only to the portion of your estate above the exemption threshold. The calculator shows you the tax liability based on the estate value, available exemption, and applicable tax rate.
The formula
Taxable Estate = Estate Value − Exemption then Estate Tax = Taxable Estate × Tax Rate (%)
If the estate value is less than or equal to the exemption, no federal estate tax is owed.
Worked example
Let's say an estate is valued at $14 million, the current federal lifetime exemption is $13.61 million (2024 figure), and the estate tax rate is 40%.
Step 1: Calculate taxable estate
- Estate value: $14,000,000
- Exemption: $13,610,000
- Taxable estate = $14,000,000 − $13,610,000 = $390,000
Step 2: Apply the tax rate
- Tax rate: 40%
- Estate tax owed = $390,000 × 0.40 = $156,000
In this scenario, heirs would owe approximately $156,000 in federal estate tax. The remaining $13,844,000 ($14,000,000 − $156,000) would be distributed to beneficiaries.
Another scenario: If the same estate had a value of $12 million instead:
- Taxable estate = $12,000,000 − $13,610,000 = −$1,610,000 (negative)
- Since the estate is below the exemption, no federal estate tax is due.
Key points to understand
Exemption changes: The federal lifetime exemption is adjusted annually for inflation and is scheduled to decrease significantly after 2025 unless Congress acts. In 2024 it's $13.61 million per person; in 2026 it's set to drop to roughly $7 million (adjusted for inflation). Married couples can combine exemptions, potentially doubling the threshold.
Tax rate: Federal estate tax uses a flat 40% rate on taxable amounts. This is one of the highest tax rates in the U.S. system.
State taxes: Many states also impose their own estate or inheritance taxes with lower exemptions and varying rates. This calculator covers federal tax only; state liability requires separate analysis.
Portability: Married couples can elect "portability" to transfer an unused exemption to the surviving spouse, effectively doubling protection without a trust.
What's included: The estate includes real property, investments, bank accounts, retirement accounts, life insurance proceeds, and other assets owned at death. Gifts made during life may also count against the exemption under certain circumstances.
Common mistakes
Confusing exemption with tax rate: The exemption is a dollar threshold; only amounts above it are taxed. A $13 million estate with a $13.61 million exemption owes zero tax, regardless of the rate.
Forgetting about appreciation: An estate's value can grow significantly between now and death. Use a realistic projected value, not just today's assets.
Ignoring state taxes: Federal exemptions don't apply to state estate or inheritance taxes, which often have much lower thresholds (some states' exemptions are $1 million or less).
Assuming no planning: Trusts, gifting strategies, charitable donations, and life insurance ownership can all reduce taxable estate. This calculator shows the baseline; professional tax and estate planning can substantially lower liability.
Disclaimer: This calculator provides an estimate for planning purposes only and is not professional tax or legal advice. Estate tax rules are complex and change frequently. Consult a qualified estate tax attorney or CPA for your specific situation before making decisions.