Estate Tax Calculator 2025

The federal estate tax is a tax on the transfer of the estate of a deceased person. As of 2025, only estates valued above $13,610,000 per individual are subject to this tax. The tax is paid by the estate itself before assets are distributed to beneficiaries. Married couples can effectively double their exemption amount through portability, allowing them to protect up to $27,220,000 from federal estate tax.

Several deductions are allowed when calculating the taxable estate, including funeral expenses, administration costs, debts owed by the deceased, mortgages and liens, losses during estate administration, and charitable bequests. The unlimited marital deduction allows assets passing to a surviving spouse to be deducted from the taxable estate. State death taxes paid may also be deducted.

Portability allows a surviving spouse to use the unused estate tax exemption of their deceased spouse. This is called the Deceased Spouse’s Unused Exemption Amount (DSUEA). To use portability, an estate tax return must be filed for the first deceased spouse, even if no tax was due, to elect portability. The surviving spouse can then apply both their own exemption and their deceased spouse’s unused exemption against their estate.

The federal estate tax is levied on the estate itself before assets are distributed to beneficiaries. In contrast, inheritance taxes are levied on the beneficiaries who receive assets from an estate. While the federal government only imposes an estate tax (not an inheritance tax), some states impose their own inheritance taxes, estate taxes, or both. The rules and exemptions for state taxes vary significantly by state.

Several strategies can help reduce estate tax liability, including making annual gifts up to the exclusion amount ($18,000 per recipient in 2024), establishing trusts, charitable giving, life insurance trusts, and family limited partnerships. Advanced techniques like Grantor Retained Annuity Trusts (GRATs) and Qualified Personal Residence Trusts (QPRTs) can also be effective. It’s important to consult with an estate planning attorney to determine which strategies are appropriate for your situation.