Estate Tax Calculator
Estimate federal estate tax owed on a taxable estate after applying the federal exemption amount. Use this during estate planning or after a death to project the estate's tax liability before probate.
About this calculator
The federal estate tax applies only to the portion of a gross estate that exceeds the federal exemption threshold (set at $12.92 million per individual in 2023, indexed for inflation). The formula is: Estate Tax = max((grossEstate − exemptionAmount) × (taxRate / 100), 0). The max(..., 0) ensures no negative tax is returned when the estate falls below the exemption — in that case, no federal estate tax is owed at all. The top marginal federal estate tax rate is 40% on all amounts above the exemption, though a graduated rate schedule technically applies to smaller taxable estates. The gross estate includes all assets — real property, investments, business interests, life insurance proceeds payable to the estate, and retirement accounts. Proper estate planning strategies such as gifting, irrevocable trusts, and charitable bequests can reduce the taxable estate before this formula is applied.
How to use
Suppose a gross estate is valued at $20,000,000, the federal exemption is $12,920,000, and the applicable tax rate is 40%. Step 1: Subtract the exemption — $20,000,000 − $12,920,000 = $7,080,000 taxable estate. Step 2: Apply the tax rate — $7,080,000 × (40 / 100) = $2,832,000. Step 3: Since the result is positive, max($2,832,000, 0) = $2,832,000. Enter grossEstate = $20,000,000, exemptionAmount = $12,920,000, taxRate = 40. The calculator returns an estimated estate tax of $2,832,000.
Frequently asked questions
How does the federal estate tax exemption work and what is the current amount?
The federal exemption is a per-person threshold below which no federal estate tax is owed. For 2023, the exemption is $12.92 million per individual, or approximately $25.84 million for a married couple using portability. Any estate value above this threshold is subject to federal estate tax at rates up to 40%. The exemption is indexed for inflation each year but is scheduled to be cut roughly in half when the Tax Cuts and Jobs Act provisions sunset after December 31, 2025, dropping to approximately $6–7 million per person. Estate plans created before this sunset date should model both exemption levels.
What assets are included in the gross estate for federal estate tax purposes?
The gross estate includes virtually all assets owned or controlled by the decedent at death: real estate, bank and investment accounts, retirement accounts (IRAs, 401(k)s), business interests, vehicles, and personal property. Crucially, life insurance death benefits are included if the decedent owned the policy or had 'incidents of ownership.' Assets in a revocable living trust are also included because the decedent retained control. Gifts made within three years of death may be pulled back in under certain rules. Properly structured irrevocable trusts and beneficiary designations can move assets outside the gross estate.
How can I reduce federal estate tax through estate planning?
The most effective strategies reduce the gross estate or increase deductible amounts before the tax is calculated. Annual gifting (up to $17,000 per recipient in 2023) removes assets from the estate tax-free over time. Irrevocable life insurance trusts (ILITs) keep death benefits out of the gross estate. Charitable bequests and charitable remainder trusts generate an estate tax deduction equal to the donated amount. Grantor retained annuity trusts (GRATs) and family limited partnerships can transfer appreciating assets at discounted values. Because the laws and exemption amounts are complex and changing, working with an estate planning attorney is essential for high-net-worth families.