Understanding Estate Taxes
The federal estate tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death. The fair market value of these items is used, not necessarily what you paid for them.
The Lifetime Exemption
For 2024, the federal estate tax exemption is $13.61 million per individual. A married couple can shield up to $27.22 million. If your net taxable estate is below this exemption limit, no federal estate tax is owed.
Common Deductions
- Marital DeductionProperty passing to a surviving spouse is generally not taxed.
- Charitable DeductionGifts made to qualifying charities can reduce the taxable estate.
Calculation Methodology
The calculator first determines the Gross Estate (Total Assets). It then subtracts any debts, marital deductions, and charitable deductions to find the Taxable Estate. Finally, it subtracts the current federal exemption limit. Any remaining amount is typically taxed at a flat rate of 40%. Note: State estate and inheritance taxes are not included in this estimate.