Estate Tax Calculator
Calculate federal and state estate taxes, inheritance taxes, and probate fees for the US, UK, Canada, and Australia. See the 2025 vs 2026 TCJA sunset impact, tax breakdown, and net inheritance — all calculated privately in your browser.
How Estate Taxes Work
The federal estate tax in the United States applies to the transfer of a deceased person's assets to their heirs. When someone passes away, their total estate value is tallied — including real estate, investments, bank accounts, retirement funds, life insurance proceeds, and personal property. From this gross estate, allowable deductions are subtracted: outstanding debts, funeral expenses, administrative costs, and charitable donations. The remaining amount is compared against the federal exemption threshold. For 2025, the exemption is $13.61 million per individual, meaning estates below this value owe zero federal estate tax. Amounts exceeding the exemption are taxed at a flat 40% rate. Married couples can effectively double the exemption through portability, where the surviving spouse claims the unused portion of the deceased spouse's exemption. The unlimited marital deduction also allows assets to pass to a surviving spouse completely tax-free, deferring any estate tax until the second spouse's death.
The 2026 TCJA Sunset
The Tax Cuts and Jobs Act of 2017 roughly doubled the federal estate tax exemption from approximately $5.5 million to over $11 million per individual, indexed for inflation. This provision is scheduled to expire, or "sunset," on January 1, 2026. When it does, the exemption is projected to drop back to approximately $7 million (the pre-TCJA level adjusted for inflation). This change could affect thousands of estates that currently fall below the exemption threshold. For example, an estate worth $10 million would owe zero federal tax in 2025 but could face roughly $1.2 million in tax in 2026. Estate planning attorneys widely recommend that individuals with estates between $7 million and $14 million take action before the sunset — strategies include making lifetime gifts, funding irrevocable trusts, and accelerating wealth transfers while the higher exemption is still available. Congress could act to extend the current exemption, but as of now, the sunset is the law.
State Estate and Inheritance Taxes
Beyond the federal estate tax, 17 states and the District of Columbia impose their own estate or inheritance taxes, often with significantly lower exemption thresholds. Massachusetts and Oregon have the lowest estate tax exemptions at $1 million and $2 million respectively, meaning many middle-class families are affected. Maryland is unique in imposing both an estate tax and an inheritance tax. Estate taxes are levied on the overall estate value, while inheritance taxes are paid by individual beneficiaries based on their relationship to the deceased. Spouses are generally exempt from inheritance tax in all states. Children may face rates of 0% to 4.5%, while siblings and non-relatives can face rates as high as 18%. Proper planning — including the use of trusts, beneficiary designations, and lifetime gifts — can substantially reduce or eliminate state-level taxes. The UK applies inheritance tax at 40% on estates exceeding a 325,000 GBP nil-rate band, with additional relief when a main residence is passed to direct descendants. Canada and Australia do not impose estate or inheritance taxes, though capital gains tax events triggered at death can result in significant tax liabilities.
Strategies to Reduce Estate Taxes
Several legal strategies can help minimize estate tax liability. Lifetime gifting allows individuals to give up to $18,000 per person per year (2025 limit) without affecting their lifetime exemption. Irrevocable life insurance trusts (ILITs) remove life insurance proceeds from the taxable estate. Charitable remainder trusts provide income during life while reducing the estate and supporting a charitable cause. Grantor retained annuity trusts (GRATs) can transfer asset appreciation to heirs with minimal or no gift tax. Family limited partnerships allow discounted transfers of business interests. For married couples, credit shelter trusts (bypass trusts) ensure both spouses' exemptions are fully utilized. Spousal lifetime access trusts (SLATs) have become especially popular before the 2026 sunset — they allow one spouse to gift assets into an irrevocable trust while the other spouse retains access as a beneficiary. Working with an estate planning attorney and tax professional is essential, as these strategies involve complex rules and potential pitfalls.
Frequently Asked Questions
What is the federal estate tax exemption?
For 2025, the federal estate tax exemption is $13.61 million per individual. This means estates valued below this threshold owe no federal estate tax. Married couples can effectively double this through portability, giving them a combined exemption of approximately $27.22 million. Any amount above the exemption is taxed at a flat 40% rate.
What happens to estate tax exemptions in 2026?
The Tax Cuts and Jobs Act (TCJA) provisions that doubled the estate tax exemption are set to sunset on January 1, 2026. The exemption is expected to drop from $13.61 million to approximately $7 million per individual (the pre-TCJA level adjusted for inflation). This means estates between $7 million and $13.61 million that currently owe no federal tax could face a 40% tax on the amount above the new, lower exemption.
Which states have estate or inheritance taxes?
Thirteen states and DC have estate taxes: Connecticut, DC, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington. Six states have inheritance taxes: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Maryland is the only state with both. State exemptions are often much lower than the federal exemption — as low as $1 million in Oregon and Massachusetts.
Is there an estate tax on money left to a spouse?
In the United States and the United Kingdom, assets left to a surviving spouse are generally exempt from estate or inheritance tax through the unlimited marital deduction. This defers the tax until the surviving spouse passes away. The surviving spouse can also claim the unused portion of the deceased spouse's exemption (portability), effectively doubling the available exemption for the combined estate.
How can I reduce estate taxes?
Common strategies include making annual tax-free gifts ($18,000 per recipient in 2025), establishing irrevocable trusts, using charitable remainder trusts, creating family limited partnerships, and maximizing the marital deduction. Before the 2026 TCJA sunset, many advisors recommend using the higher exemption through spousal lifetime access trusts (SLATs) or other irrevocable gifting strategies. Consulting an estate planning attorney is essential.
What is the difference between estate tax and inheritance tax?
An estate tax is levied on the total value of the deceased person's estate before distribution to heirs — it is paid by the estate itself. An inheritance tax is levied on individual beneficiaries based on what they receive and their relationship to the deceased. Spouses typically pay 0%, while non-relatives may pay 15-18%. Some states impose one or the other, and Maryland imposes both.