Estate Tax Calculator

How the federal estate tax actually works

The federal estate tax applies to the transfer of your taxable estate at death. The taxable estate is your gross estate minus allowable deductions, most commonly the marital deduction, the charitable deduction, debts, and administration expenses. What remains is compared to the applicable exemption. The excess is taxed at rates that top out at 40 percent.

The exemption is generous and temporary

The current basic exclusion amount is roughly $13,990,000 per person for 2025. A married couple can effectively double that number by using portability. The elevated exemption is scheduled to sunset after 2025 and revert to roughly half its inflation-adjusted level. That is the law as written, and a serious plan is built against it, not against a hope that Congress will extend.

Portability and DSUE

Portability allows the surviving spouse to add the deceased spouse's unused exclusion, or DSUE, to their own. It is not automatic. The executor must make an election on a timely-filed Form 706 at the first death, even when no tax is due. Skipping that filing has quietly cost heirs seven and eight figures in avoidable tax.

Why life insurance keeps coming up in this conversation

Estate tax is due in cash, typically within nine months of death. Families whose wealth is tied up in a closely held business, real estate, or a concentrated stock position often do not have the liquidity to write that check without selling something they did not want to sell. Life insurance owned outside the taxable estate, usually inside an irrevocable life insurance trust, delivers non-taxable liquidity that heirs use to pay the tax and keep the underlying assets intact. That is the classic estate-liquidity use case, and it is where the calculator's number becomes the starting point for a design conversation, not the end of one.

What this tool does not do

It does not calculate state estate or inheritance tax, and several states impose their own at exemption levels far below the federal number. It does not model generation-skipping transfer tax, valuation discounts, or the compression that hits assets held in a non-grantor trust. It assumes prior lifetime gifts have used exclusion at today's rate and does not model clawback. Use the result as a sizing estimate, then involve an estate attorney and a CPA before executing any structure.