Estate Tax Calculator 2026

Federal Estate Tax Exemption in 2026

The federal estate tax exemption for 2026 is $15,000,000 per person, established by the One Big Beautiful Bill Act (OBBB, P.L. 119-21), signed into law on July 4, 2025. This represents a significant increase from the previous exemption levels under the Tax Cuts and Jobs Act of 2017 (TCJA), which had set the exemption at approximately $13.61 million for 2024 and was scheduled to revert to roughly $7 million in 2026 before the OBBB intervened.

For married couples, portability allows the surviving spouse to use any unused portion of the deceased spouse's exemption. This means a married couple can effectively shield up to $30,000,000 from federal estate tax. To claim portability, the executor must file IRS Form 706 for the first spouse to die, even if no tax is owed. The Deceased Spousal Unused Exclusion Amount (DSUE) transfers to the surviving spouse and can be combined with their own exemption. Source: IRS Estate Tax page.

How Estate Tax Is Calculated

The federal estate tax uses a progressive bracket system ranging from 18% on the first $10,000 of taxable estate up to 40% on amounts exceeding $1,000,000. However, the unified credit effectively eliminates tax on the first $15,000,000 (the exemption amount). In practice, estates above the exemption pay approximately 40% on the excess, since the lower brackets are absorbed by the credit.

The calculation follows these steps: (1) determine the gross estate value, (2) subtract allowable deductions — marital deduction, charitable bequests, debts, funeral costs, and administration expenses, (3) calculate the tentative tax using the graduated rate table, (4) apply the unified credit (which equals the tax on the exemption amount), and (5) the remaining amount is the federal estate tax owed. State estate taxes, if applicable, are calculated separately using each state's own exemption and rate structure.

State Estate Taxes to Watch

Twelve states and the District of Columbia impose their own estate taxes, often with much lower exemptions than the federal threshold. Even if your estate owes zero federal tax, you may owe state estate tax. Key states include:

• Washington — highest top rate at 20%, exemption ~$2.193M
• Oregon — exemption $1M (lowest in the nation), rates 10-16%
• Massachusetts — exemption $2M, rates 0.8-16%
• New York — exemption ~$6.94M with a "cliff" — if estate exceeds 105% of exemption, the entire estate is taxed
• Connecticut — exemption $13.61M (tied to prior federal), rates 12-12%
• Minnesota — exemption ~$3M, rates 13-16%
• Illinois — exemption $4M, rates 0.8-16%
• Maryland — exemption $5M, plus a separate inheritance tax
• Hawaii, Maine, Rhode Island, Vermont, DC — exemptions range from $1M to $6.8M

State estate tax exemptions do NOT automatically follow the federal exemption increase. Check your state's current law, as many states have decoupled from federal thresholds.

Estate Planning Strategies to Reduce Tax

Several legitimate strategies can reduce or eliminate estate tax liability:

• Marital Deduction: Property passing to a surviving U.S. citizen spouse is 100% deductible — unlimited amount. This defers tax until the second spouse's death.
• Charitable Giving: Bequests to qualified charities are fully deductible. Charitable Remainder Trusts (CRTs) provide income during life and benefit charity at death.
• Annual Gift Exclusion: For 2026, you can gift $19,000 per person per year ($38,000 for married couples) without using any lifetime exemption. This is a powerful tool for reducing estate size over time.
• Irrevocable Trusts: Assets placed in irrevocable trusts are generally removed from the taxable estate. GRATs (Grantor Retained Annuity Trusts) transfer asset appreciation to heirs with minimal or zero gift tax.
• Life Insurance Trusts (ILITs): Life insurance proceeds owned by an ILIT are excluded from the taxable estate while still providing liquidity to pay estate taxes.

Last updated: May 2026. Based on P.L. 119-21 (OBBB) and IRS guidance for tax year 2026.