Summary
- The estate tax exemption is the amount you can leave to your heirs without incurring estate tax.
- The estate tax exemption is $15 million per person for 2026, or $30 million for married couples.
- The federal estate tax ranges from 18% to 40% (depending on the size of the estate) for amounts above the estate tax exemption.
- Some strategic estate planning can help reduce the amount of estate taxes your estate will need to pay.
- Unbiased can connect you to a financial advisor for all your estate planning needs.
What is the estate tax exemption for 2026?
The estate tax exemption is the maximum amount of your estate that you’re allowed to give your heirs without paying taxes. This can be done either before or after your death, or a combination of both.
It’s portable for married couples, which means that if your spouse hasn’t gifted the full $15 million before their death, the surviving spouse can add that amount to their exemption for a total of $30 million for two spouses.
For 2026, the estate tax exemption is $15 million per person, or $30 million for married couples.
The estate tax exemption increases over time due to inflation and changes in federal law, as shown in the chart below.
| Year | Estate tax exemption amount |
|---|---|
| 2020 | $11.58 million |
| 2021 | $11.7 million |
| 2022 | $12.06 million |
| 2023 | $12.92 million |
| 2024 | $13.61 million |
| 2025 | $13.99 million |
| 2026 | $15 million |
How does the estate tax exemption work?
After your death, the size of your estate is calculated for the IRS, and anything over that $15 million exemption amount will be subject to the federal estate tax. If you’re under it, you won’t need to file an estate tax return or pay taxes on it. If the value is over the allowable amount, you’ll pay taxes on it.
The estate pays estate taxes before the assets are transferred to beneficiaries, unless you’re a surviving spouse. Estate taxes typically aren’t paid until the surviving spouse passes away.
Estate tax rates above $15 million are paid at a marginal rate, like income tax rates.
For example, you’ll pay the lowest tax rate of 18% for amounts over the exemption that are between $0 and $10,000, then 20% for amounts between $10,000 and $20,000, and so on. They are included in the chart below.
| Estate value above $15 million | Federal estate tax rate |
|---|---|
| $0 to $10,000 | 18% |
| $10,001 to $20,000 | 20% |
| $20,001 to $40,000 | 22% |
| $40,001 to $60,000 | 24% |
| $60,001 to $80,000 | 26% |
| $80,001 to $100,000 | 28% |
| $100,001 to $150,000 | 30% |
| $150,001 to $250,000 | 32% |
| $250,001 to $500,000 | 34% |
| $500,001 to $750,000 | 37% |
| $750,001 to $1 million | 39% |
| $1 million + | 40% |
How can I use the estate tax exemption?
For simple estates valued under the exemption amount of $15 million, you won’t need to file an estate tax return. If your estate is valued over this amount, there are some strategies to reduce the amount of estate taxes.
Transfer to a trust
A trust is a legal structure that allows you to remove assets from your name and place them in a trust for the benefit of a beneficiary. This essentially removes the value of your estate from your name – but much depends on how it is set up, the type of trust, and whether or not it is properly administered. Taxes also work differently, so it’s imperative to consult with an attorney, CPA, and financial advisor to evaluate whether or not establishing a trust is the right move.
Coordinate with spouse
The exemption amount applies to each spouse, effectively doubling the estate tax exemption to $30 million. It’s wise to strategize how you’re going to maximize the exemption amount between the two of you to reduce the tax burden on your estate and heirs.
Gift tax exclusion
The gift tax exclusion allows you to give up to $19,000 to a single recipient without incurring gift tax. If you’re married, each partner can give $19,000 to the recipient (such as your child), totaling $38,000. These gifts don’t count against your lifetime federal gift and estate tax exemption, nor do they need to be cash.
It’s strategic to gift a portion of your estate away every year to reduce taxes. On the other hand, if you give more than the allowable $19,000 each year, it will count against your lifetime exclusion exemption. If you gifted your children $200,000 for a down payment on a home, that amount is subtracted from your $15 million exemption.
Charitable giving
Charitable gifts are completely separate from the limits of the gift tax exclusion and estate tax exemption. There’s no limit to charitable gifts, no gift tax to qualified 501(c)(3) organizations, and it doesn’t use up your lifetime exemption amount. Anything you leave to charity is fully tax-deductible.
What states impose an estate tax?
In addition to a federal estate tax, your state could also levy an estate tax. As of 2026, 12 states and the District of Columbia have an estate tax.
The value of your estate determines whether you’ll pay estate taxes, and at what rate. The estate tax exemption is the amount allowed before you need to pay estate taxes.
On top of that, you should also be aware of the five states that have inheritance taxes.
The following table shows the exemptions and tax rates for those states with estate and inheritance taxes.
| State | Estate Tax Exemption | Estate Tax Rate | Inheritance Tax Exemption | Inheritance Tax Rate |
|---|---|---|---|---|
| Connecticut | $13,990,000 | 12% | - | - |
| Hawaii | $5,490,000 | 10% to 20% | - | - |
| Illinois | $4,000,000 | 0.8% to 16.0% | - | - |
| Maine | $7,000,000 | 8% to 12% | - | - |
| Maryland | $5,000,000 | 0.8% to 16.0% | $1,000 | 0% to 10% |
| Massachusetts | $2,000,000 | 0.8% to 16.0% | - | - |
| Minnesota | $3,000,000 | 13% to 16% | - | - |
| New York | $7,160,000 | 3.06% to 16.00% | - | - |
| Oregon | $1,000,000 | 10% to 16% | - | - |
| Rhode Island | $1,802,431 | 0.8% to 16.0% | - | - |
| Vermont | $5,000,000 | 0.16 | - | - |
| Washington | $3,000,000 | 10% to 35% | - | - |
| District of Columbia | $4,873,200 | 11.2% to 16.0% | - | - |
| Kentucky | - | - | $1,000 | 0% to 16% |
| Nebraska | - | - | $100,000 | 0% to 15% |
| New Jersey | - | - | $25,000 | 0% to 16% |
| Pennsylvania | - | - | No exemption | 0% to 15% |
Source: Tax Foundation
Bottom line
There’s no substitute for a good financial advisor when it comes to estate planning. They’re knowledgeable and experienced in the best scenarios for your unique needs.
Unbiased can match you with a financial advisor for all your pressing questions. Get connected to an advisor today.