The federal estate tax is a tax on your right to transfer property at your death, levied on the value of a deceased person’s assets that exceed a specific, high exemption threshold. The tax is paid by the estate itself, before assets are distributed to heirs.

Key Details
Exemption Amount: The vast majority of estates do not have to pay this tax because the exemption amount is very high.
For deaths occurring in 2024, the threshold is $13.61 million for individuals ($27.22 million for married couples).
For deaths occurring in 2025, the threshold is $13.99 million for individuals ($27.98 million for married couples).
Beginning January 1, 2026, the exemption is permanently set at $15 million per individual ($30 million for married couples), indexed for inflation.
Tax Rate: The portion of an estate’s value that exceeds the exemption is subject to a progressive tax rate that ranges from 18% to a top rate of 40%.
Taxable Assets: The gross estate includes all property and interests owned at the date of death, such as cash, real estate, securities, life insurance proceeds (if payable to the estate), and business interests.
Deductions: The taxable estate is calculated after subtracting certain deductions, including mortgages and other debts, estate administration expenses, and property transferred to a surviving spouse or qualified charities.
Filing: If an estate’s gross value (plus lifetime taxable gifts) exceeds the filing threshold, the executor must file Form 706, Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return within nine months of the date of death.
State Taxes: The federal estate tax is separate from state estate or inheritance taxes. Five states (Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania) impose their own estate taxes, often with much lower exemption thresholds. Iowa previously had an inheritance tax, but it was eliminated as of January 1, 2025. Maryland is the only state that has both an inheritance tax and an estate tax.
The “One Big Beautiful Bill Act” (OBBBA)
The OBBBA, signed into law on July 4, 2025, made the higher estate tax exemption amounts originally set by the 2017 Tax Cuts and Jobs Act permanent, preventing them from automatically reverting to pre-2018 levels at the end of 2025. This provides long-term clarity for estate planning, as the $15 million individual exemption (indexed for inflation) will continue indefinitely unless new legislation is passed.