Transparent method
The formula
Worked example
Example inputs
How to interpret the result
A number of states apply their own estate tax with an exemption threshold well below the federal one, so an estate that owes nothing federally can still owe state estate tax entirely on its own. The two systems are separate, and clearing the federal threshold says nothing about whether a state threshold has also been cleared.
Before you rely on it
What to check
Confirm your specific state's own exemption threshold and rate structure, since it can differ substantially from the federal exemption and applies independently of it.
The common error
Where people go wrong with state estate tax calculator
Assuming an estate below the federal exemption threshold owes no estate tax at all. A number of states apply their own, much lower threshold, and an estate can owe state estate tax while owing nothing federally.
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
Estate value is the total of everything the person owned at death, including real estate, accounts, business interests and life insurance owned by the estate. The applicable exemption is the amount your state exempts from estate tax; states with an estate tax set exemptions from about $1 million to well above $10 million. Eligible deductions include debts, funeral costs, and marital and charitable transfers. The tax rate you enter should be the state's rate on the amount above the exemption.
Using the estimated transfer tax in a real decision
If it does, the exemption is far lower than the federal one, so estates that owe nothing federally can still owe state tax.
When the result stops applying
State estate tax systems use graduated rates and cliffs that a single rate approximates, and rules on portability, gifts within a certain period and property in other states complicate the result. Exemptions change by law. Estate tax is separate from inheritance tax, which is paid by the recipient, and from income tax on inherited retirement accounts.
What to compare it with
Compare with the federal estate tax calculator and the inheritance tax page. For planning, ask an estate attorney about marital deduction planning, lifetime gifts and trusts. The wills and beneficiary review is a separate step, since accounts with named beneficiaries pass outside the will.
People also ask
Frequently asked questions
Which states have an estate tax?
About a dozen states plus the District of Columbia, including several in the Northeast and Pacific Northwest, with exemptions much lower than the federal exemption.
How is an estate tax different from an inheritance tax?
An estate tax is paid by the estate before assets pass to heirs, and an inheritance tax is paid by the person who receives the assets.
Does a surviving spouse owe estate tax?
Generally not, since assets passing to a US-citizen spouse qualify for the unlimited marital deduction, though the tax may come due at the second death.