Estate Tax Calculator: Estimate Federal Estate Tax Liability
Calculate potential federal estate tax liability with our free estate tax calculator. Plan your estate and understand exemptions, deductions, and tax rates for 2023 and beyond.
Category: Financial
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Frequently Asked Questions
What is the federal estate tax?
The federal estate tax is a tax on the transfer of property at death. It applies to the total value of a person's assets minus allowable deductions and exemptions, before the assets are distributed to heirs.
Who has to pay estate taxes?
Only estates exceeding the federal exemption amount are subject to estate tax. For 2023, the exemption is $12.92 million per individual or $25.84 million for married couples who use portability. This means most estates don't owe federal estate tax.
What's the difference between estate tax and inheritance tax?
Estate tax is paid by the estate before assets are distributed to heirs and is based on the total estate value. Inheritance tax is paid by individual beneficiaries on what they receive and varies based on their relationship to the deceased. The federal government has no inheritance tax, but some states do.
How can I reduce estate taxes?
Common strategies include: gifting during your lifetime, creating irrevocable trusts, setting up charitable trusts or foundations, using the unlimited marital deduction by leaving assets to your spouse, purchasing life insurance to cover estate taxes, and using family limited partnerships or LLCs.
Do states have their own estate taxes?
Yes, some states impose their own estate and/or inheritance taxes, often with lower exemption amounts than the federal government. As of 2023, about 12 states and the District of Columbia have estate taxes, and 6 states have inheritance taxes. The rates and exemptions vary by state.