What the estate tax is
The IRS describes the estate tax as a tax on your right to transfer property at your death. The starting point is the gross estate: everything you own or have certain interests in at death, at fair market value. From it come deductions, chiefly for property passing to a surviving spouse and to qualified charities, and debts and expenses. What is left, plus taxable gifts made during life, is measured against the basic exclusion amount, and the tax applies to the excess.
The 40 percent rate is how the Congressional Research Service summarises the law: estates and gifts are taxed at 40 percent in excess of a lifetime exemption. The exemption is one amount shared by the gift tax and the estate tax, so taxable gifts during life reduce what is left at death.
The exemption, 2017 to 2026
| Year of death | Filing threshold and basic exclusion |
|---|---|
| 2017 | $5,490,000 |
| 2018 | $11,180,000 |
| 2019 | $11,400,000 |
| 2020 | $11,580,000 |
| 2021 | $11,700,000 |
| 2022 | $12,060,000 |
| 2023 | $12,920,000 |
| 2024 | $13,610,000 |
| 2025 | $13,990,000 |
| 2026 | $15,000,000 |
The 2018 jump was the 2017 tax law doubling the exemption, with a scheduled return to the lower level in 2026; the Congressional Research Service notes the 2025 law instead set it at $15,000,000 per decedent dying after 2025, indexed for inflation from there. The IRS lists $15,000,000 as the 2026 filing threshold.
Estates worked out
| Taxable estate, single person, no prior taxable gifts | Above the $15,000,000 exemption | Federal estate tax at 40% | Effective rate on the whole estate |
|---|---|---|---|
| $12,000,000 | $0 | $0 | 0.0% |
| $15,000,000 | $0 | $0 | 0.0% |
| $18,000,000 | $3,000,000 | $1,200,000 | 6.7% |
| $25,000,000 | $10,000,000 | $4,000,000 | 16.0% |
| $40,000,000 | $25,000,000 | $10,000,000 | 25.0% |
The same $18,000,000 estate would have owed $1,604,000 under the 2025 exemption. Property left outright to a US citizen spouse or to charity is deducted before the comparison, so a married person's estate typically owes nothing at the first death regardless of size; the question is deferred to the survivor, which is where portability comes in. The net worth calculator gives the gross figure a household would start from, with the caveat that the IRS counts insurance, annuities and retirement accounts in the gross estate even though they pass outside a will.
Portability for married couples
The IRS allows the estate of a decedent who is survived by a spouse to elect to pass any of the decedent's unused exemption to the surviving spouse. With the election a couple shelters up to $30,000,000 between them in 2026, whatever the split of assets. The catch is procedural: the election is made on a timely filed Form 706 for the first spouse, and the IRS says that return is required for the election regardless of the size of the gross estate, even when no tax is due and no return would otherwise be needed. An estate that skips the return forfeits the unused amount.
| Couple with $24,000,000 combined, all to the survivor at the first death | With portability | Without |
|---|---|---|
| Tax at the first death | $0 | $0 |
| Survivor's exemption at the second death | $30,000,000 | $15,000,000 |
| Tax at the second death on $24,000,000 | $0 | $3,600,000 |
Filing: who, when
- Who must file. Form 706 is required when the gross estate plus adjusted taxable gifts exceeds the filing threshold for the year of death, $15,000,000 for 2026.
- When. Nine months after the date of death; an automatic six-month extension is available by filing Form 4768 on or before the due date.
- Portability filers. An estate below the threshold files only to make the election, and must do so on time.
- Gifts during life. The 2026 annual exclusion is $19,000 per recipient ($194,000 to a non-citizen spouse); gifts within it never touch the lifetime exemption, and the guide gift tax annual exclusion 2026 covers what happens above it.
This guide reports the federal figures from the IRS and the Congressional Research Service. State estate or inheritance taxes are a separate question, valuation and deductions are the estate attorney's and appraiser's work, and the Form 706 instructions govern the return.
Frequently asked questions
What is the estate tax exemption for 2026?
$15,000,000 per person. The IRS lists $15,000,000 as the 2026 filing threshold and basic exclusion amount, up from $13,990,000 for 2025, and the Congressional Research Service summary of the 2025 law describes the exemption as $15 million per decedent dying after 2025, indexed for inflation from there. A married couple can shelter $30,000,000 with the portability election.
What is the estate tax rate?
40 percent on the amount above the exemption, per the Congressional Research Service description of the law: estates and gifts are taxed at 40 percent in excess of the lifetime exemption. An $18,000,000 estate with no deductions owes 40 percent of $3,000,000, which is $1,200,000; a $15,000,000 estate owes nothing.
Who has to file an estate tax return?
Per the IRS, Form 706 is required when the gross estate plus adjusted taxable gifts exceeds the filing threshold for the year of death, $15,000,000 for a death in 2026. It is due nine months after the date of death, with an automatic six-month extension available on Form 4768 filed by the due date. An estate below the threshold must still file if it wants to elect portability for the surviving spouse.
What is portability?
The IRS allows the estate of a decedent survived by a spouse to elect to pass any of the decedent's unused exemption to the surviving spouse, the deceased spousal unused exclusion. The election is made on a timely filed Form 706 even when no tax is due and the estate is below the threshold. Without it the first spouse's unused exemption is lost; with it the survivor can later shelter their own exemption plus the unused part.
How do lifetime gifts affect the estate tax?
The exemption is a single lifetime amount shared between gift and estate tax, so taxable gifts made during life, those above the annual exclusion, use it up. For 2026 the annual exclusion is $19,000 per recipient, $194,000 for gifts to a spouse who is not a US citizen, per Rev. Proc. 2025-32; gifts within those limits do not count against the lifetime figure at all.
Sources
- IRS: Estate tax (a tax on the right to transfer property at death; the gross estate; Form 706 required when the gross estate plus adjusted taxable gifts exceeds the filing threshold, $13,990,000 for 2025 and $15,000,000 for 2026; portability of unused exemption; deductions for property passing to a surviving spouse and charities)
- IRS: Frequently asked questions on estate taxes (Form 706 due nine months after death; six-month extension on Form 4768; the filing thresholds by year of death; the portability election requires a timely filed return; the marital and charitable deductions)
- Congressional Research Service, Tax Provisions in P.L. 119-21, the FY2025 Reconciliation Law (estates and gifts taxed at 40 percent above the lifetime exemption; the exemption raised to $15 million per decedent dying after 2025, indexed for inflation)
- IRS Rev. Proc. 2025-32, section 4.42 (the 2026 annual gift exclusion of $19,000 and $194,000 for a non-citizen spouse)