Question 1

What is the federal estate tax exemption for 2026?

Accepted Answer

The federal estate tax exemption in 2026 is $13.61 million per individual, or $27.22 million for married couples using portability. Estates below this threshold owe zero federal estate tax. This is a historically high exemption — it was $5.49 million in 2017 — and is scheduled to revert to approximately $7 million (inflation-adjusted) after December 31, 2025 unless Congress acts.

Question 2

Does this calculator include inheritance tax vs. estate tax?

Accepted Answer

Federal estate tax is paid by the estate before distribution. Inheritance tax is paid by the beneficiary after receiving assets. The US has no federal inheritance tax. Six states have their own inheritance tax (NE, MD, IN, KY, PA, NJ) with rates varying by the beneficiary's relationship to the deceased. This calculator estimates federal and state estate taxes only.

Question 3

How can I reduce estate tax exposure?

Accepted Answer

The most effective strategies include: gifting assets during your lifetime (the annual gift exclusion is $18,000/person in 2024, tax-free), placing assets in irrevocable trusts that remove them from your taxable estate, making charitable donations, using a Spousal Lifetime Access Trust (SLAT), and life insurance trusts (ILITs) to pay estate taxes without adding to the taxable estate.

Question 4

Are retirement accounts included in an estate?

Accepted Answer

Yes — traditional IRA and 401(k) balances are included in your gross estate for estate tax purposes. Roth accounts are also included but pass to heirs income-tax-free. Beneficiary designations on retirement accounts allow them to bypass probate but not estate taxes. Naming a charity as retirement account beneficiary removes that value from the taxable estate entirely.

Question 5

Is life insurance included in my taxable estate?

Accepted Answer

If you own the life insurance policy, the death benefit is included in your taxable estate. Many high-net-worth individuals use an Irrevocable Life Insurance Trust (ILIT): the trust owns the policy, so the benefit passes outside the estate while still providing liquidity to pay estate taxes. This is one of the most common estate planning tools.

Inheritance Tax Estimator