US Estate Tax Calculator
2026 — Federal + State

$15,000,000 per person for deaths in 2026 — set by the One Big Beautiful Bill Act (OBBBA, Pub. L. 119-21, signed July 4 2025), which amended IRC §2010(c)(3) effective January 1 2026. The increase is permanent (no sunset) and will be indexed for inflation from 2027. A married couple can shield $30,000,000 by electing portability of the deceased spouse's unused exclusion (DSUE) on a timely-filed Form 706. Everything above the exemption is taxed at a flat 40% federal rate — the graduated 18%-40% brackets in IRC §2001(c) top out at $1 million, far below the exemption, so the marginal rate on any taxable estate is effectively 40%. The same $15M unified exemption covers lifetime taxable gifts and generation-skipping transfers (GST). Source: Rev. Proc. 2025-32; IRS Estate and Gift Tax pages, accessed July 2026.

Seventeen states plus DC levy their own death tax in 2026. Twelve states and DC impose an ESTATE tax (paid by the estate before distribution): Oregon ($1M exemption — the lowest), Rhode Island ($1,838,056), Massachusetts ($2M), Minnesota ($3M), Washington ($3,076,000, top rate 35% for deaths through June 30 2026), Illinois ($4M cliff), DC ($4,988,400), Maryland ($5M), Vermont ($5M), Hawaii ($5.49M), Maine ($7M), New York ($7.35M with a 105% cliff), and Connecticut ($15M, matching federal). Five states impose an INHERITANCE tax (paid by the heir, rate depends on relationship): Pennsylvania, New Jersey, Kentucky, Nebraska, and Maryland — which uniquely has both. Iowa's inheritance tax was fully repealed for deaths after January 1 2025. If your state is not listed, it levies no death tax at all — 33 states charge nothing.

No — inherited money and property are not federal taxable income to the heir (IRC §102). Neither the $500,000 house nor the $2M brokerage account you inherit appears on your Form 1040. Three important exceptions: (1) Inherited RETIREMENT accounts — distributions from an inherited Traditional IRA or 401(k) ARE ordinary income to the beneficiary, and most non-spouse heirs must empty the account within 10 years (SECURE Act). (2) Income the asset earns AFTER death — dividends, rent, interest — is taxable to whoever receives it. (3) State INHERITANCE tax in PA, NJ, KY, NE, and MD is a transfer tax the heir owes based on relationship, separate from income tax. For appreciated assets like stocks and real estate, heirs actually get a tax BENEFIT: the step-up in basis wipes out all capital gains accrued during the decedent's life.

Portability lets a surviving spouse inherit the deceased spouse's unused federal estate tax exemption — the DSUE (Deceased Spousal Unused Exclusion). Example: a husband dies in 2026 using $3M of his $15M exemption; his widow can add the remaining $12M to her own $15M, sheltering $27M total. The catch: portability is NOT automatic. The executor must elect it on a Form 706 estate tax return filed within 9 months of death (a simplified late election within 5 years is available under Rev. Proc. 2022-32 for estates below the filing threshold). Filing Form 706 solely to capture DSUE is standard practice even for modest estates — the exemption could be worth $6M in avoided tax (40% × $15M) if the survivor's estate later grows. Note: portability applies federally and in Maryland and Hawaii, but most estate-tax states (NY, MA, OR, CT...) do NOT allow it — a key reason couples in those states still use credit-shelter (bypass) trusts.

Under IRC §1014, the cost basis of inherited assets resets ('steps up') to fair market value on the date of death. Stock your mother bought for $50,000 that is worth $800,000 when she dies passes to you with an $800,000 basis — the $750,000 of lifetime appreciation is NEVER taxed as capital gains. Sell the next day and owe $0. Since only estates above $15M owe any federal estate tax in 2026, the step-up is the bigger tax story for the 99.9% of estates below that line: it routinely saves heirs 15-20% federal capital gains (plus 3.8% NIIT and state tax) on decades of appreciation. Planning implications: highly appreciated assets are often better HELD until death than gifted (gifts carry over the old basis), and better held than sold in old age. Assets in Traditional IRAs/401(k)s get NO step-up — they are taxed as ordinary income to heirs.

Three layers. (1) Annual exclusion: $19,000 per recipient in 2026 (Rev. Proc. 2025-32) — unlimited recipients, no reporting required. A married couple can jointly give $38,000 per recipient per year ($194,000 to a non-citizen spouse). (2) Unlimited exclusions: direct payments of tuition to a school or medical bills to a provider don't count at all (IRC §2503(e)), and gifts to a US-citizen spouse are unlimited. (3) Lifetime exemption: gifts above the annual exclusion are 'taxable gifts' reported on Form 709 — no tax is due until cumulative lifetime taxable gifts exceed the $15,000,000 unified exemption, but every dollar reduces the exemption remaining at death (which is why this calculator asks for prior taxable gifts). Systematic annual-exclusion gifting is the simplest estate-reduction strategy: $38,000/year to each of 3 children and their spouses moves $2.28M out of a couple's estate over a decade, tax-free.