Estate Tax Threshold Calculator 2026 (Federal & State Levels)
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The short version (2026):
- Federal exemption: $15 million per person ($30 million per married couple). Only the amount above it is taxed, up to 40%. The vast majority of estates owe $0 federally.
- This $15M figure is now permanent — the “One Big Beautiful Bill” (2025) repealed the old law that would have cut the exemption roughly in half in 2026.
- The real trap is your state: 12 states + DC have their own estate tax (as low as $1M in Oregon), and a few states tax heirs with an inheritance tax. You can owe state tax while owing nothing federally.
Check both the federal number and your state’s column below.
Estate Tax Exposure Estimator (2026)
Enter your estimated gross estate to see your federal and state exposure. Remember to include life insurance you own, retirement accounts, and all real estate.
Estimates for 2026. Federal: amounts above the exemption are taxed at the top 40% rate. State: figures shown are a rough ceiling using each state's top rate; most state estate taxes are graduated, so the actual bill is usually lower. Several states index their exemption yearly. This is an estimate, not tax advice — confirm with your state's department of revenue or an estate-tax professional.
Estate Tax Threshold: Federal & State (2026)
Will your estate owe taxes when you die? For the large majority of Americans, the answer is no. The federal estate tax exemption sits at $15 million per person in 2026, so only a small fraction of estates ever owe a federal dime. But here’s the trap most people miss: 12 states plus the District of Columbia impose their own estate taxes, several with thresholds far below the federal level, and a handful of other states levy a separate inheritance tax on what your heirs receive. This guide shows the federal numbers, every state’s rules, and what actually counts toward your taxable estate, so you can tell whether you’re exposed and what to do about it.
Need the estate-planning documents themselves? LawDepot builds a state-specific living trust and will online, with step-by-step guidance.
Federal Estate Tax Exemption (2026)
The federal exemption is the amount you can pass at death before any federal estate tax applies. It’s generous, it’s “portable” between spouses, and as of 2026 it’s permanent.
| Year | Individual Exemption | Married Couple (Portability) | Top Tax Rate |
|---|---|---|---|
| 2024 | $13.61 million | $27.22 million | 40% |
| 2025 | $13.99 million | $27.98 million | 40% |
| 2026 | $15 million | $30 million | 40% |
| 2027 and beyond | $15M + inflation indexing | $30M + indexing | 40% |
A married couple can effectively double the individual exemption through “portability” — electing to carry over a deceased spouse’s unused amount. The practical result is that the vast majority of estates fall well under the federal threshold and owe nothing at the federal level. The catch is that your state may tax you long before the federal government does.
The Exemption Is Now Permanent (the “Sunset” Was Repealed)
For years, the high federal exemption carried a scheduled cut. Under the Tax Cuts and Jobs Act of 2017, the exemption was set to roughly halve at the end of 2025 — dropping to around $7 million per person — which drove a wave of urgent estate planning.
That sunset has been repealed. The 2025 budget law (the “One Big Beautiful Bill Act,” enacted July 2025) removed the 2025 expiration date and set the exemption at $15 million per person for 2026, made permanent and indexed for inflation going forward. So the “drop in half” that worried families near the threshold is no longer on the table. Planning still matters — especially for state estate taxes and for very large estates — but you no longer need to rush ahead of a federal cliff that won’t happen.
How the Federal Estate Tax Is Calculated
A common misconception is that crossing the exemption taxes your whole estate. It doesn’t — only the amount above the exemption is taxed, on a graduated scale.
| Taxable Amount (Above Exemption) | Tax Rate |
|---|---|
| $0 – $10,000 | 18% |
| $10,001 – $20,000 | 20% |
| $20,001 – $40,000 | 22% |
| $40,001 – $60,000 | 24% |
| $60,001 – $80,000 | 26% |
| $80,001 – $100,000 | 28% |
| $100,001 – $150,000 | 30% |
| $150,001 – $250,000 | 32% |
| $250,001 – $500,000 | 34% |
| $500,001 – $750,000 | 37% |
| $750,001 – $1,000,000 | 39% |
| Over $1,000,000 | 40% |
So an estate that exceeds the exemption by $100,000 is taxed only on that $100,000, not on the millions underneath it. The top federal rate is steep, but it applies solely to the excess.
States With Their Own Estate Taxes (2026)
Prefer the full reference next to the tool? Our verified table of estate tax by state lists every 2026 exemption and rate with a link to each state’s own revenue source.
This is where many families get an unwelcome surprise. State estate taxes often kick in at thresholds far below the federal exemption — sometimes as low as $1 million, an amount a single home plus retirement savings can easily reach.
| State | Exemption (2026) | Top Rate | Notes |
|---|---|---|---|
| Connecticut | $15 million | 12% | Matches the federal exemption |
| District of Columbia | ~$4.99 million | 16% | Indexed to inflation |
| Hawaii | $5.49 million | 20% | Highest state rate (tied) |
| Illinois | $4 million | 16% | Flat — not indexed |
| Maine | $7.16 million | 12% | Indexed |
| Maryland | $5 million | 16% | Also has an inheritance tax |
| Massachusetts | $2 million | 16% | Not indexed |
| Minnesota | $3 million | 16% | Flat |
| New York | $7.35 million | 16% | “Cliff”: exceed 105% of the exemption and the ENTIRE estate is taxed |
| Oregon | $1 million | 10-16% | Lowest exemption in the US |
| Rhode Island | ~$1.84 million | 16% | Indexed |
| Vermont | $5 million | 16% | Flat |
| Washington | $3 million | 20% | Exclusion $3M (raised 2025); top rate reverted to 20% for deaths on/after July 1, 2026 |
Figures as of early 2026. Several states index their exemption annually, so the indexed amounts (DC, Maine, New York, Rhode Island) shift each year — always confirm the current number with your state’s department of revenue before relying on it.
If you live in, or own property in, one of these states, you may owe state estate tax even though you’re nowhere near the federal threshold. Some states use a “cliff” that taxes the entire estate once you cross the line; others tax only the excess. Check your state’s row carefully.
States With Inheritance Taxes (2026)
An inheritance tax is different from an estate tax. An estate tax is paid by the estate before distribution; an inheritance tax is paid by the person who receives the money, and the rate usually depends on how closely related they are to you.
| State | Spouse Exempt? | Children Rate | Siblings Rate | Other Heirs Rate |
|---|---|---|---|---|
| Kentucky | Yes | 0% (Class A exempt) | 0% (Class A exempt) | 6-16% |
| Maryland | Yes | 0% (lineal) | 0% (exempt) | 10% |
| Nebraska | Yes | 1% (over $100K) | 1% (over $100K) | 15% (over $25K) |
| New Jersey | Yes | 0% (Class A exempt) | 11-16% | 15-16% |
| Pennsylvania | Yes | 4.5% | 12% | 15% |
Spouses are almost always exempt, and children typically pay little or nothing, but more distant relatives and unrelated heirs can face meaningful rates. (Iowa repealed its inheritance tax for deaths on or after January 1, 2025, so it no longer appears here.) If you plan to leave assets to a friend, a niece, or a non-relative in an inheritance-tax state, this is worth planning around.
A living trust keeps your estate out of probate and plans for incapacity. LawDepot builds a state-specific revocable trust online.
What Counts Toward Your Taxable Estate
Your “gross estate” is bigger than most people assume. It’s not just your bank accounts — it includes assets many people forget.
| Asset | Included? | Notes |
|---|---|---|
| Real estate (all properties) | Yes | Fair market value at death |
| Bank accounts | Yes | Full balance |
| Investment/brokerage accounts | Yes | FMV at death |
| Retirement accounts (401k, IRA) | Yes | Full balance (income tax also due by beneficiary) |
| Life insurance (you own the policy) | Yes | Full death benefit |
| Life insurance (in irrevocable trust) | No | Removed from estate if the trust owns it |
| Business interests | Yes | FMV — may qualify for special valuation |
| Vehicles, jewelry, art | Yes | Appraised value |
| Jointly-owned property | Partial | Your ownership share |
| Revocable (living) trust assets | Yes | You control = you own for tax purposes |
| Irrevocable trust assets | No | Properly funded irrevocable trust is excluded |
| Annual-exclusion gifts | No | $19,000/person/year (2026) not counted |
| Lifetime gifts above the annual exclusion | Reduce exemption | They draw down your $15M lifetime exemption |
The big surprise for most people is life insurance: if you own the policy, the full death benefit counts toward your taxable estate, even though it pays out to someone else. That single item can push an otherwise modest estate over a state threshold — which is exactly why irrevocable life insurance trusts exist.
Estate Tax Reduction Strategies
If you’re over a threshold, several proven strategies can shrink your taxable estate — most best set up with professional help.
- Annual gifting. You can give up to the annual exclusion ($19,000 per recipient in 2026) each year tax-free, steadily moving wealth out of your estate.
- The unlimited marital deduction. Everything you leave to a U.S.-citizen spouse passes estate-tax-free, deferring any tax until the second death.
- Irrevocable life insurance trust (ILIT). Holding life insurance in an ILIT keeps the death benefit out of your taxable estate.
- Charitable giving. Bequests to qualified charities are fully deductible.
- Irrevocable trusts. Moving assets into the right irrevocable structure removes them — and their future growth — from your estate.
A revocable living trust, by contrast, does not reduce estate tax — it only avoids probate. Estate-tax reduction requires the irrevocable tools above.
Portability: Don’t Waste the First Spouse’s Exemption
For married couples, portability is the single most valuable — and most overlooked — tool. When the first spouse dies, any unused portion of their exemption can transfer to the survivor, effectively letting a couple shield close to $30 million. But here’s the trap: portability is not automatic. The surviving spouse (through the estate’s executor) must file a federal estate tax return to formally elect it, even when no tax is owed and a return wouldn’t otherwise be required.
Families skip this all the time because they assume “no tax due means no filing needed,” and in doing so they forfeit millions in future protection. If your spouse has died and your combined estate is anywhere near the threshold, talk to a professional about filing the return to capture the unused exemption.
The Step-Up in Basis: Estate Tax’s Hidden Upside
There’s a tax benefit at death that partly offsets estate-tax worry: the “step-up in basis.” When you inherit an asset, its cost basis is reset to its fair market value on the date of death, which can erase decades of capital-gains tax for your heirs. A home bought for $100,000 and worth $600,000 at death passes to heirs with a $600,000 basis — so if they sell it soon after, they owe little or no capital-gains tax on that $500,000 of appreciation.
This creates a genuine tradeoff. Gifting an asset during your life removes it from your taxable estate but carries over your low basis, potentially leaving heirs a big capital-gains bill. Holding it until death keeps it in your estate but gives heirs the step-up. For estates below the $15M exemption — the overwhelming majority — holding for the step-up is usually the smarter move.
Common Estate Tax Mistakes
A few oversights cost families the most.
- Assuming “under the federal exemption” means safe. Your state may tax at $1–3 million — see the table above.
- Owning your own life insurance. It inflates your taxable estate; an ILIT fixes this.
- Assuming a living trust saves estate tax. It doesn’t — only probate.
- Forgetting to elect portability. The surviving spouse must file a return to capture the first spouse’s unused exemption.
- Overlooking out-of-state property. Real estate in an estate-tax state can be taxed there regardless of where you live.
Frequently Asked Questions
What is the federal estate tax exemption for 2026?
$15 million per person, or $30 million for a married couple using portability. Only the amount above the exemption is taxed, at rates up to 40%. The figure was made permanent and indexed for inflation by the 2025 budget law.
Is the estate tax exemption still going to drop in half?
No. The Tax Cuts and Jobs Act would have cut the exemption to roughly $7 million after 2025, but the 2025 “One Big Beautiful Bill” repealed that sunset and set the exemption permanently at $15 million (indexed). The scheduled drop will not happen.
Does my estate have to pay federal estate tax?
Only if it exceeds $15 million (per person) in 2026, so the vast majority of estates owe nothing federally. Check your state separately — state thresholds are often far lower.
What’s the difference between estate tax and inheritance tax?
An estate tax is paid by the estate before assets are distributed. An inheritance tax is paid by the heir who receives the assets, with rates that often depend on the relationship to the deceased.
Which states have estate or inheritance taxes?
Twelve states plus DC have an estate tax (lowest: Oregon at $1 million), and five states — Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania — have an inheritance tax. The tables above list them with exemptions and rates.
Does life insurance count toward my taxable estate?
Yes, if you own the policy — the full death benefit is included in your gross estate. Holding the policy in an irrevocable life insurance trust keeps it out.
Can a living trust reduce estate taxes?
No. A revocable living trust avoids probate but does not reduce estate tax. Reducing estate tax requires irrevocable strategies like gifting, ILITs, and charitable or irrevocable trusts.
What is portability and do I have to do anything to get it?
Portability lets a surviving spouse use the deceased spouse’s unused federal exemption, nearly doubling a couple’s protection. It is not automatic: the executor must file a federal estate tax return to elect it, even if no tax is owed.
Ready to put a plan in place? LawDepot builds a state-specific living trust and last will online, with funding guidance included.
The Bottom Line
Most Americans will never owe federal estate tax — the 2026 exemption is $15 million per person and, now that the sunset is repealed, it’s permanent. The bigger risk for many families is a state estate or inheritance tax that starts at a far lower threshold, plus assets people forget (especially life insurance you own). Use the tables above to check both the federal and your state’s rules, remember that only the amount above the exemption is taxed, and don’t overlook the two tools that quietly save couples the most — portability and the step-up in basis. If you’re anywhere near a state or federal threshold, a short conversation with an estate-tax professional now can save your heirs a large bill later.
Sources & References
This guide is fact-checked against the following official and authoritative sources:
- IRS — Estate Tax
- IRS — Whats New: Estate and Gift Tax
- Cornell LII — Estate Planning
- Cornell LII — 26 U.S.C. § 2001 (Estate Tax)
Fact-checked: July 2026 · ClearLegalTips editorial team. This is legal information, not legal advice.
ClearLegalTips is an independent publisher of plain-English legal guides, free document templates, and cost calculators for common U.S. legal tasks. Every article is reviewed by founder and editor Fatih Öztürk and fact-checked against official sources: statutes, court fee schedules, and government filing pages. Not a law firm; nothing here is legal advice.
