Estate Tax Calculator
Estimate federal estate tax on your estate based on the 2025 exemption and top rate.
Results
Visualization
How It Works
The Estate Tax Calculator estimates how much federal estate tax your heirs may owe on your estate based on 2025 tax laws, exemption amounts, and tax rates. This helps you understand the true value passing to your beneficiaries after taxes and plan accordingly to minimize tax burden. This tool is designed for both quick estimates and detailed planning scenarios. Results update instantly as you adjust inputs, making it easy to compare different approaches and understand how each variable affects the outcome. For best accuracy, use precise measurements rather than rough estimates, and consider running multiple scenarios to establish a realistic range of expected results.
The Formula
Variables
- Total Estate Value — The gross value of everything you own at death, including real estate, investments, retirement accounts, life insurance, business interests, and personal property—before any deductions or taxes
- Estate Tax Exemption — The federal amount you can pass to heirs tax-free. For 2025, this is $13.61 million per individual (adjusted annually for inflation). Amounts above this threshold are subject to federal estate tax
- Estate Tax Rate (%) — The federal tax rate applied to taxable estate (the amount exceeding your exemption). The 2025 federal estate tax rate is 40% for estates over the exemption limit
- Taxable Estate — The portion of your estate subject to federal taxation, calculated by subtracting your exemption from total estate value
- Federal Estate Tax — The actual dollar amount of federal tax owed, calculated by applying the estate tax rate to the taxable estate
- Net to Heirs — The amount your beneficiaries actually receive after federal estate taxes are paid, calculated as total estate value minus federal estate tax
Worked Example
Let's say you have an estate worth $20 million, including a home, investment portfolio, and business interests. Using the 2025 exemption of $13.61 million, your taxable estate is $20 million − $13.61 million = $6.39 million. At the 40% federal estate tax rate, you owe $6.39 million × 0.40 = $2.556 million in federal estate tax. This means your heirs receive $20 million − $2.556 million = $17.444 million. Your effective estate tax rate is ($2.556 million ÷ $20 million) × 100 = 12.78%, which is less than the 40% rate because the exemption shields the first $13.61 million from taxation.
Practical Tips
- Remember that the 2025 exemption of $13.61 million is temporary and scheduled to drop to approximately $7 million per person in 2026 unless Congress extends current law—plan ahead if your estate is close to future exemption levels
- Use a spousal lifetime access trust (SLAT) or bypass trust to effectively double your exemption if you're married; proper planning can shield up to $27.22 million from federal estate tax in 2025
- Life insurance can be a cost-effective way to cover potential estate taxes—the death benefit is usually income-tax-free and can provide liquidity for heirs to pay taxes without selling assets
- State estate taxes may apply in addition to federal taxes; 17 states plus D.C. have their own estate or inheritance taxes with lower exemptions (sometimes $1–$6 million), so check your state's rules
- Annual gifting of up to $18,000 per recipient (2024) or $19,000 (2025) reduces your taxable estate over time and is one of the simplest estate tax reduction strategies available to everyone
Frequently Asked Questions
Who actually has to pay federal estate tax?
Only estates exceeding the federal exemption threshold must pay estate tax. For 2025, that's estates over $13.61 million for individuals or $27.22 million for married couples (if properly structured). Fewer than 0.1% of estates owe any federal estate tax, but high-net-worth individuals should plan accordingly.
What happens to my exemption if I'm married—do my spouse and I get to double it?
Yes, but only if you properly elect 'portability' on your first spouse's estate tax return. This lets the surviving spouse use both exemptions, effectively protecting up to $27.22 million in 2025. Without proper planning, you could waste the first spouse's exemption and leave more of the second estate exposed to taxation.
Does life insurance count toward my taxable estate?
Yes—unless it's owned by an irrevocable life insurance trust (ILIT). If you own the policy yourself or your estate is the beneficiary, the full death benefit is included in your taxable estate. Using an ILIT removes the life insurance from your estate while still providing tax-free proceeds to pay estate taxes.
What's the difference between the exemption and the tax rate, and why do both matter?
The exemption is a dollar threshold—amounts below it owe no tax. The rate is the percentage applied to the excess above the exemption. Both matter because a $20 million estate with a $13.61 million exemption and 40% rate owes $2.556 million in tax, but a $15 million estate would owe only $574,000, showing how the exemption dramatically reduces tax liability.
What assets are included in my taxable estate?
Nearly everything you own: real estate, bank accounts, stocks and bonds, retirement accounts (IRAs, 401(k)s), life insurance death benefits, business interests, and even the present value of certain trusts. A few exceptions include assets in certain irrevocable trusts and assets you've already given away with proper gifts. Consult a tax advisor about your specific situation.
Sources
- IRS Estate and Gift Tax
- IRS Publication 950: Introduction to Estate and Gift Taxes
- Federal Estate Tax Exemption (Tax Foundation)
- Estate Planning Basics (American College of Financial Services)
- State Estate and Inheritance Tax (Tax Foundation State Resources)