The federal estate tax exemption determines how much wealth you can pass on tax-free at death. Here is the complete 2026 guide — including what may happen to the exemption in 2026 and beyond.
2026 Federal Estate Tax Exemption
| Detail | 2026 Amount |
|---|---|
| Individual exemption | $13.99 million |
| Married couple (with portability) | $27.98 million |
| Estate tax rate (above exemption) | 18%–40% |
| Annual gift tax exclusion | $19,000/recipient |
Estate Tax Exemption History
| Year | Individual Exemption |
|---|---|
| 2017 | $5.49 million |
| 2018 (TCJA doubled it) | $11.18 million |
| 2021 | $11.7 million |
| 2023 | $12.92 million |
| 2024 | $13.61 million |
| 2025 | $13.99 million |
| 2026 | $13.99 million (TCJA sunset pending) |
Important: The TCJA provisions were set to expire December 31, 2025, which would have cut the exemption roughly in half. The final 2026 figure reflects Congressional action or IRS adjustment — monitor IRS.gov for the authoritative 2026 dollar amount.
Who Actually Pays Estate Tax?
The IRS estimates fewer than 0.2% of estates actually owe federal estate tax. With a $13.99 million exemption:
- A family home worth $500,000 + $2 million retirement accounts + $1 million investments = $3.5 million estate — completely exempt
- Only estates worth more than $13.99 million face federal estate tax
How the Estate Tax Is Calculated
$$\text{Estate Tax} = (\text{Taxable Estate} - \text{Exemption}) \times \text{Tax Rate}$$
Example: $20 million estate, individual filer
- Taxable: $20M − $13.99M = $6.01M above exemption
- Tax at 40% (simplified): ~$2.4M federal estate tax owed
- Net to heirs: ~$17.6M
In practice, the tax is calculated on a graduated rate schedule from 18% to 40%.
Federal Estate Tax Rates
| Taxable Amount Above Exemption | Tax Rate |
|---|---|
| $0–$10,000 | 18% |
| $10,001–$20,000 | 20% |
| $20,001–$40,000 | 22% |
| $40,001–$60,000 | 24% |
| $60,001–$80,000 | 26% |
| $80,001–$100,000 | 28% |
| $100,001–$150,000 | 30% |
| $150,001–$250,000 | 32% |
| $250,001–$500,000 | 34% |
| $500,001–$750,000 | 37% |
| $750,001–$1,000,000 | 39% |
| Over $1,000,000 above exemption | 40% |
Portability: Doubling the Exemption for Couples
When one spouse dies, their unused estate tax exemption can be “ported” to the surviving spouse:
- Executor must file IRS Form 706 within 9 months of the first death (or 6-month extension)
- The surviving spouse gets both exemptions: up to $27.98 million in 2026
- No automatic portability — must elect it on Form 706
State Estate Taxes
Several states have their own estate taxes with much lower exemptions:
| State | Exemption (approx. 2026) | Rate |
|---|---|---|
| Massachusetts | $2 million | 0.8%–16% |
| Oregon | $1 million | 10%–16% |
| Washington | $2.193 million | 10%–20% |
| Hawaii | $5.49 million | 10%–20% |
| Illinois | $4 million | 0.8%–16% |
| New York | $7.16 million | 3.06%–16% |
| Maryland | $5 million | 0.8%–16% |
Maryland is the only state with both an estate tax and an inheritance tax.
Estate Tax Planning Strategies
| Strategy | How It Helps |
|---|---|
| Annual gifts ($19K/person/year) | Reduces estate size over time |
| Irrevocable life insurance trust (ILIT) | Keeps life insurance out of taxable estate |
| Charitable giving / CRT | Reduces estate and provides income |
| Grantor retained annuity trust (GRAT) | Transfers appreciation out of estate |
| Spousal lifetime access trust (SLAT) | Uses exemption now before potential sunset |
Related Guides
- Gift Tax Exclusion Limit
- Annual Gift Tax Limit
- Dependent Care FSA Limits
- Social Security Earnings Limit
Sources
- Internal Revenue Service. “Tax Information for Individuals.” irs.gov
- U.S. Department of Labor. “Wages and the Fair Labor Standards Act.” dol.gov/agencies/whd/flsa
- Social Security Administration. “Benefits and Eligibility Information.” ssa.gov/benefits
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