Estate Tax Planning Calculator
Calculate federal and state estate tax liability. Understand exemption thresholds, tax rates, and planning strategies to minimize estate taxes and maximize inheritance for heirs.
Estate Information
Federal Estate Tax Exemption (2026)
$$7,000,000 (Projected)
TCJA exemption (~$13.99M) sunsets end of 2025. Projected exemption ~$7M per person in 2026. Married couples can port unused exemption.
Your Exemption:$7000000
Remaining:$2000000
Estate Summary
Total Estate:$5000000
Total Tax:$0.00
Net to Heirs:$5000000.00
Effective Tax Rate:0.00%
Estate Tax Reduction Strategies
- Annual Gift Exclusion: Gift up to $18K per person per year (2024). Unlimited recipients. Removes assets from estate.
- Lifetime Gifts: Use exemption during life. Gifts reduce estate but also use exemption. Plan carefully.
- Irrevocable Trusts: Transfer assets to irrevocable trust. Removes from estate. Grantor retains no control.
- Life Insurance Trust (ILIT): Life insurance proceeds in ILIT. Excluded from estate. Pay premiums via gifts.
- Charitable Remainder Trust: Income during life, remainder to charity. Reduces estate, income tax deduction.
- Family Limited Partnership: Transfer business assets to FLP. Valuation discounts reduce estate value.
- Portability Election: Married: deceased spouse's unused exemption transfers to surviving spouse. File estate tax return.
- Spousal Transfer: Unlimited marital deduction. Assets to spouse tax-free. But spouse's estate later taxed.
Federal Estate Tax Rates
| Taxable Amount Over | Rate | Tax on Base |
|---|---|---|
| $0 | 18% | $0 |
| $10,000 | 20% | $1,800 |
| $20,000 | 22% | $3,800 |
| $40,000 | 24% | $8,200 |
| $60,000 | 26% | $13,000 |
| $80,000 | 28% | $18,200 |
| $100,000 | 30% | $23,800 |
| $150,000 | 32% | $38,800 |
| $250,000 | 34% | $70,800 |
| $500,000 | 37% | $155,800 |
| $750,000 | 39% | $248,300 |
| $1,000,000+ | 40% | $345,800 |
State Estate/Inheritance Taxes
- Estate Tax States: NY, MA, CT, OR, IL, MN, MD, HI, VT, WA, DC. Tax on estate before distribution.
- Inheritance Tax States: NJ, PA, IA, KY, NE. Tax on heir based on relationship. Spouse usually exempt.
- Lower Exemptions: Many states have lower exemptions than federal. MA exemption only $2M.
- No Portability: State exemptions usually not portable between spouses. Each spouse separate exemption.
- Cliff Effect: Some states (NY) tax entire estate if exceeds exemption by even $1. No graduated tax.
- Planning Required: If live in state with estate tax, additional planning needed beyond federal.
Estate Planning Basics
- Will: Basic document directing asset distribution. Subject to probate. Can include tax planning provisions.
- Revocable Trust: Avoids probate. Assets in trust during life. Revocable - can change. Still in estate for tax.
- Irrevocable Trust: Removes assets from estate. Cannot change. Estate tax benefit. Lose control.
- Probate: Court process for wills. Costs, delays, public. Trusts avoid probate.
- Beneficiary Designations: Retirement accounts, life insurance pass by designation. Not in will/trust usually.
- Power of Attorney: Financial decisions if incapacitated. Estate planning essential document.
- Healthcare Directive: Medical decisions if incapacitated. Living will, healthcare proxy.
Estate Tax Mistakes
- Not Planning: Many don't plan until too late. Estate tax can take 40% of excess over exemption.
- TCJA Sunset: Assuming $13.99M exemption forever. SUNSET end of 2025 - exemption drops to ~$7M.
- State Tax: Ignoring state estate tax. Some have much lower exemptions than federal.
- No Portability: Not filing estate tax return for portability. First spouse dies - unused exemption lost if not filed.
- Beneficiary Designations: Not updating. Old designations override will. Ex-spouse may inherit.
- Trust Funding: Created trust but didn't transfer assets. Empty trust = no benefit.