Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Federal estate tax only applies above a substantial exemption threshold, so most estates owe nothing at all regardless of how large they feel to the family involved, and the tax that does apply is charged only on the value above that exemption, not on the estate's full worth.
Before you rely on it
What to check
Confirm the current exemption amount and whether portability from a deceased spouse applies before assuming any estate tax is owed at all.
The common error
Where people go wrong with federal estate tax calculator
Assuming a sizable estate automatically owes federal estate tax. The exemption threshold is high enough that the overwhelming majority of estates fall entirely below it and owe nothing.
Sensitivity evidence
How entered estate-tax rate changes the simplified federal estate tax
| Entered estate-tax rate | Simplified federal estate tax | Taxable estate above exemption | Estate remaining after modeled tax |
|---|---|---|---|
| 36.0% | $2,520,000 | $7,000,000 | $11,480,000 |
| 38.0% | $2,660,000 | $7,000,000 | $11,340,000 |
| 40.0%worked example | $2,800,000 | $7,000,000 | $11,200,000 |
| 42.0% | $2,940,000 | $7,000,000 | $11,060,000 |
| 44.0% | $3,080,000 | $7,000,000 | $10,920,000 |
Every input, tested
Which input moves the simplified federal estate tax most
| Input | Tested from | To | Simplified federal estate tax at each end | Swing |
|---|---|---|---|---|
| Gross taxable estate estimate | $13,500,000 | $16,500,000 | $2,200,000 to $3,400,000 | $1,200,000 (43%) |
| Entered federal exemption | $6,300,000 | $7,700,000 | $3,080,000 to $2,520,000 | $560,000 (20%) |
| Entered estate-tax rate | 38.0% | 42.0% | $2,660,000 to $2,940,000 | $280,000 (10%) |
| Debts and administration deductions | $900,000 | $1,100,000 | $2,840,000 to $2,760,000 | $80,000 (2.9%) |
| Charitable and marital deductions | $0.00 | $1.00 | $2,800,000 to $2,800,000 | $0.40 |
Two variables at once
Simplified federal estate tax by entered estate-tax rate and gross taxable estate estimate
| Entered estate-tax rate \ Gross taxable estate estimate | $12,000,000 | $15,000,000 | $18,000,000 |
|---|---|---|---|
| 36.0% | $1,440,000 | $2,520,000 | $3,600,000 |
| 38.0% | $1,520,000 | $2,660,000 | $3,800,000 |
| 40.0% | $1,600,000 | $2,800,000 | $4,000,000 |
| 42.0% | $1,680,000 | $2,940,000 | $4,200,000 |
| 44.0% | $1,760,000 | $3,080,000 | $4,400,000 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Gross taxable estate estimate | $15,000,000 |
| Debts and administration deductions | $1,000,000 |
| Charitable and marital deductions | $0.00 |
| Entered federal exemption | $7,000,000 |
| Entered estate-tax rate | 40.0% |
| Simplified federal estate tax | $2,800,000 |
| Taxable estate above exemption | $7,000,000 |
| Estate remaining after modeled tax | $11,200,000 |
Where the inputs come from
Gross taxable estate is the fair market value of everything the person owned or controlled at death, including real estate, investments, retirement accounts, business interests and life insurance the person owned. Debts and administration deductions include mortgages, funeral costs and legal fees. Charitable and marital deductions reduce the taxable estate. The federal exemption is set by law each year and is a personal amount; this tool takes an entered figure, so use the current published exemption, and the rate is 40% above it.
Using the simplified federal estate tax in a real decision
The larger practical issues for most families are state taxes, basis step-up and liquidity to pay bills.
When the result stops applying
The law has changed the exemption several times, and it is scheduled to adjust, so confirm the current amount for the year of death. Lifetime taxable gifts reduce the exemption available at death. Trusts, valuation discounts and special-use valuation change the taxable amount. This is a simplified estimate, not tax advice.
What to compare it with
See the state estate tax and inheritance tax calculators for state-level taxes, and the inherited IRA pages for income tax on inherited accounts. Estate planning with an attorney covers wills, trusts, beneficiary designations and gifting. The federal income tax page covers the decedent's final return.
People also ask
Frequently asked questions
Who owes federal estate tax?
Only estates whose value exceeds the federal exemption, an amount set annually that covers the vast majority of estates. Everything above it is taxed at up to 40%.
What is estate tax portability?
A surviving spouse can use the deceased spouse's unused exemption if the estate files the right return, effectively doubling the exemption for a couple.
Do heirs pay income tax on inherited assets?
Generally not on the assets themselves, and they receive a stepped-up basis for most property, but withdrawals from inherited retirement accounts are taxable.