Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Inheritance tax, where it applies at all, is charged to the beneficiary and often varies by how closely related that beneficiary is to the person who died: a spouse or child frequently faces a different rate, or none at all, compared to a more distant relative or unrelated heir receiving from the identical estate.
Before you rely on it
What to check
Confirm which jurisdiction's rules actually apply and what relationship-based exemption or rate tier fits the specific beneficiary, since both vary by state and by relationship.
The common error
Where people go wrong with inheritance tax calculator
Assuming one flat rate applies regardless of who's inheriting. The same estate can produce very different inheritance tax outcomes for a spouse, a child and an unrelated heir under the identical set of state rules.
Sensitivity evidence
How entered tax rate changes the estimated transfer tax
| Entered tax rate | Estimated transfer tax | Estimated taxable transfer |
|---|---|---|
| 6.0% | $54,000 | $900,000 |
| 8.0% | $72,000 | $900,000 |
| 10.0%worked example | $90,000 | $900,000 |
| 12.0% | $108,000 | $900,000 |
| 14.0% | $126,000 | $900,000 |
Every input, tested
Which input moves the estimated transfer tax most
| Input | Tested from | To | Estimated transfer tax at each end | Swing |
|---|---|---|---|---|
| Estate or inheritance value | $1,800,000 | $2,200,000 | $70,000 to $110,000 | $40,000 (44%) |
| Entered tax rate | 8.0% | 12.0% | $72,000 to $108,000 | $36,000 (40%) |
| Applicable exemption | $900,000 | $1,100,000 | $100,000 to $80,000 | $20,000 (22%) |
| Eligible deductions | $90,000 | $110,000 | $91,000 to $89,000 | $2,000 (2.2%) |
Two variables at once
Estimated transfer tax by entered tax rate and estate or inheritance value
| Entered tax rate \ Estate or inheritance value | $1,600,000 | $2,000,000 | $2,400,000 |
|---|---|---|---|
| 6.0% | $30,000 | $54,000 | $78,000 |
| 8.0% | $40,000 | $72,000 | $104,000 |
| 10.0% | $50,000 | $90,000 | $130,000 |
| 12.0% | $60,000 | $108,000 | $156,000 |
| 14.0% | $70,000 | $126,000 | $182,000 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Estate or inheritance value | $2,000,000 |
| Applicable exemption | $1,000,000 |
| Eligible deductions | $100,000 |
| Entered tax rate | 10.0% |
| Estimated transfer tax | $90,000 |
| Estimated taxable transfer | $900,000 |
Where the inputs come from
Inheritance tax is charged to the person who receives assets, and rates usually depend on the recipient's relationship to the person who died: spouses are commonly exempt, children pay little or nothing in several states, and more distant relatives and unrelated heirs pay higher rates. Enter the value received, the exemption, deductions and a rate from your state's schedule. Only a handful of states, such as Pennsylvania, New Jersey, Kentucky, Nebraska and Maryland, levy this tax.
When the result stops applying
This uses one rate as a simplification, and real schedules use multiple rates by class of heir. Some states also apply the tax to property located there even if the decedent lived elsewhere. Life insurance and retirement accounts may be treated differently. It does not include federal income tax on inherited retirement accounts or the estate tax.
What to compare it with
See the state estate tax and federal estate tax calculators for taxes paid by the estate. The inherited IRA calculators cover income tax on retirement accounts. An estate attorney can review how assets are titled and whether gifts or trusts reduce tax.
People also ask
Frequently asked questions
Do I pay federal tax on an inheritance?
No federal inheritance tax exists. Beneficiaries generally owe no federal income tax on inherited assets, though income from inherited retirement accounts is taxable.
Which relatives are exempt from inheritance tax?
Spouses are usually exempt everywhere, and in many states children and grandchildren are exempt or pay low rates, while siblings and others pay more.
When is inheritance tax due?
Typically within several months of death, often with a discount for early payment and interest for late payment, so check your state's deadline.