Estate Tax Calculator (U.S. Federal)

How this estate tax calculator works

This calculator provides a simplified estimate of potential U.S. federal estate tax based on your gross estate, deductions, marital status, and lifetime taxable gifts. It is not a substitute for a full Form 706 calculation, but it can help you understand whether your estate is likely to be taxable and by roughly how much.

Key assumptions

• The tool focuses on federal estate tax only, not state estate or inheritance taxes.
• It uses a single top rate (e.g., 40%) applied to the taxable amount above the exemption, instead of the full graduated rate table.
• It assumes that all bequests to a U.S. citizen spouse qualify for the unlimited marital deduction.
• Portability is modeled as an additional exemption (DSUE) when elected and entered.
• All amounts are in U.S. dollars.

Estate tax formula (simplified)

Understanding key estate tax concepts

Gross estate

Your gross estate includes the fair market value of most assets you own or control at death, such as:

• Real estate (primary residence, vacation homes, rental property)
• Bank accounts, brokerage accounts, stocks, bonds, mutual funds
• Interests in closely held businesses, partnerships, LLCs
• Retirement accounts (IRAs, 401(k)s), to the extent included in the estate
• Life insurance proceeds on your life if you own the policy or have incidents of ownership
• Certain transfers made within three years of death

Allowable deductions

The Internal Revenue Code allows several major deductions when computing the taxable estate:

• Debts and expenses – mortgages, other liabilities, funeral and administration expenses.
• Charitable deduction – bequests to qualified charities and certain foundations.
• Marital deduction – qualifying transfers to a U.S. citizen spouse, either outright or in a qualifying trust.

Lifetime taxable gifts and the unified credit

The federal estate and gift tax share a unified lifetime exemption. Taxable gifts you made during life (beyond the annual exclusion and other exclusions) generally use up part of this exemption. At death, your estate tax calculation effectively adds:

• Taxable estate at death, plus
• Prior taxable gifts

The unified credit (exemption) is then applied once to this combined amount. This is why large lifetime gifts can reduce the exemption available to shelter your estate at death.

Marital deduction and portability

For married couples where both spouses are U.S. citizens:

• The unlimited marital deduction generally allows you to leave any amount to your spouse free of federal estate tax at the first death.
• However, this can cause the surviving spouse’s estate to be larger and potentially taxable later.
• Portability allows the surviving spouse to use the deceased spouse’s unused exemption (DSUE), but only if a timely estate tax return is filed for the first spouse.

Example: Single person with a large estate

Assume:

• Gross estate: $20,000,000
• Debts & expenses: $1,000,000
• Charitable bequests: $2,000,000
• Marital status: Single
• Lifetime taxable gifts: $3,000,000
• Exemption: $13,610,000 (illustrative)
• Top rate: 40%

Then:

• Taxable estate before exemption = 20,000,000 − 1,000,000 − 2,000,000 = $17,000,000
• Total taxable transfers = 17,000,000 + 3,000,000 = $20,000,000
• Taxable amount after exemption = 20,000,000 − 13,610,000 = $6,390,000
• Estimated estate tax = 6,390,000 × 40% = $2,556,000

Federal vs. state estate and inheritance taxes

In addition to the federal estate tax, some states impose their own estate taxes or inheritance taxes, often with much lower exemptions. This calculator does not model those state-level taxes. If you live in a state with its own estate or inheritance tax, your total transfer tax burden may be higher than the federal estimate shown here.

Estate planning strategies to consider

Common strategies used to manage potential estate tax exposure include:

• Making use of the annual gift tax exclusion to transfer wealth gradually.
• Charitable planning (charitable remainder trusts, donor-advised funds, direct bequests).
• Using irrevocable life insurance trusts (ILITs) to keep life insurance proceeds outside the taxable estate.
• Leveraging valuation discounts for interests in closely held businesses or family limited partnerships (where appropriate and compliant with IRS rules).
• Coordinating wills and trusts to fully use both spouses’ exemptions and portability.

These strategies are complex and should be implemented with the help of an experienced estate planning attorney and tax advisor.

Important disclaimer

This calculator is for educational and planning purposes only. It simplifies many technical rules, does not account for all deductions, credits, or special situations, and does not reflect future changes in law or inflation adjustments. It does not create an attorney–client or tax advisor–client relationship. Always consult a qualified professional before making estate planning decisions.

Frequently asked questions

Who actually pays estate tax?

The estate itself is responsible for paying any federal estate tax due, typically from estate assets before distributions to beneficiaries. The executor or personal representative files the estate tax return (Form 706) and handles payment.

How often do estate tax laws change?

Estate tax exemptions and rates have changed many times over the past decades and are subject to future legislation. Some provisions are scheduled to “sunset” or revert to lower exemption amounts unless Congress acts. For this reason, it is wise to review your estate plan regularly.

What records should I keep for estate tax planning?

Keep organized records of:

• Major asset values and ownership documents
• Beneficiary designations for retirement accounts and life insurance
• Lifetime gifts, including dates, amounts, and any gift tax returns filed
• Estate planning documents (wills, trusts, powers of attorney)