How the federal estate tax works in 2026
When someone dies, the federal estate tax applies to the value of everything they owned above an exemption amount. For deaths in 2026, the exemption is $15,000,000 per person, and the amount above it is taxed at 40%. Very few estates owe federal estate tax.
The calculator starts with the total estate, subtracts debts and costs, gifts to charity and anything left to a U.S. citizen spouse, then adds back taxable gifts made during life, because lifetime gifts and the estate share one exemption.
Key rules
- Unlimited marital deduction – everything left to a U.S. citizen spouse passes free of estate tax.
- Portability – a surviving spouse can add the unused exemption of the spouse who died first, if the executor files an estate tax return (Form 706) to elect it.
- Annual gift exclusion – in 2026 you can give up to $19,000 per person without using any exemption.
- State taxes – some states charge their own estate or inheritance tax, often starting at much smaller estates.
Frequently asked questions
Do heirs pay income tax on what they inherit?
Generally no. Inherited property also usually gets a "stepped-up" cost basis to its value at death, which reduces capital gains tax when heirs sell. Inherited traditional IRAs are an exception: withdrawals are taxed as income.
When is the estate tax return due?
Form 706 is due nine months after the date of death, with a six-month extension available.
Will the exemption change after 2026?
Under current law the $15 million exemption is permanent and is adjusted for inflation each year after 2026.