Estate Tax Calculator 2026
$15M OBBBA exemption, 40% rate, plus state estate and inheritance tax overlay
Last updated: November 2025 · OBBBA Pub. L. 119-21 §70106 made the $15,000,000 exemption permanent
Estate Inventory
Real estate, retirement accounts (IRA/401k), brokerage, life insurance death benefit, business interests, cash, collectibles
Mortgages, loans, credit cards, final medical bills, funeral expenses, estate administration costs
Unlimited deduction for amounts left to qualified §501(c)(3) charities
Unlimited deduction for amounts left to a US-citizen surviving spouse (IRC §2056)
Gifts above the annual exclusion that used up part of your $15M unified credit
Federal Estate Tax Calculation
California has no state-level estate or inheritance tax in 2026. Only federal estate tax applies.
OBBBA Made the $15M Exemption Permanent
The One Big Beautiful Bill Act (Pub. L. 119-21 §70106, signed July 4, 2025) made the $15,000,000 per-person federal estate, gift, and GST exemption permanent, effective tax year 2026 and indexed for inflation. This replaces the prior law's scheduled sunset back to roughly $7M on January 1, 2026. The top federal rate remains 40%.
Understanding Federal & State Estate Tax
The $15M OBBBA Exemption
The One Big Beautiful Bill Act, signed by President Trump on July 4, 2025 as Pub. L. 119-21, made the prior TCJA-era doubled exemption permanent at $15,000,000 per person (§70106), starting tax year 2026, indexed for inflation. Without OBBBA, the exemption was scheduled to fall to roughly $7M on January 1, 2026. With the OBBBA exemption now permanent, only an estimated 0.05% of estates (about 2,000 estates per year) will owe federal estate tax. The top federal rate remains 40% on amounts above the exemption.
Portability and the Marital Deduction
Two key married-couple provisions: (1) the unlimited marital deduction under IRC §2056 lets you leave any amount to a US-citizen spouse with zero estate tax, deferring all tax until the second death. (2) Portability lets the surviving spouse use any unused portion of the first-to-die spouse's $15M exemption, effectively giving the couple a $30M shield. To preserve portability, the executor must file Form 706 for the first death and check the portability election box, even if no tax is due. The Deceased Spousal Unused Exclusion (DSUE) does not expire and does not lapse.
The Unified Credit and Lifetime Gifts
The $15M exemption is a unified credit covering both lifetime taxable gifts and estate-at-death transfers. Every dollar of lifetime taxable gifts above the annual exclusion reduces your remaining $15M exemption at death. The 2026 annual gift exclusion is $19,000 per donee per donor ($38,000 with spousal split), gifts up to this amount are NOT taxable, do not require a Form 709 filing, and do not reduce your $15M lifetime credit. Strategically using the annual exclusion year after year, plus direct payments of tuition and medical bills (which are also excluded), can transfer significant wealth without ever dipping into the lifetime exemption.
Step-Up in Basis at Death (IRC §1014)
Inherited appreciated assets receive a stepped-up cost basis to fair market value on the date of death. A stock you bought at $10 now worth $100 passes to heirs at a $100 basis, eliminating the $90 built-in gain forever. This applies regardless of federal estate-tax liability and is a primary reason wealthy families HOLD highly appreciated assets until death rather than sell during life. The combination of the $15M exemption + step-up means most estates pay no federal estate tax AND escape capital gains tax on appreciated assets, the "tax-free trifecta" if planned correctly.
State Estate & Inheritance Tax
With federal estate tax now affecting almost no one, state-level death taxes are often the bigger concern. 12 states + DC impose an estate tax: Oregon ($1M exemption), Massachusetts ($2M), Minnesota and Washington ($3M), Illinois ($4M), DC ($4.71M), Vermont and Maryland ($5M), Hawaii ($5.49M), Maine ($7M), New York ($7.16M), Rhode Island ($1.8M), and Connecticut ($15M). Washington's top rate hits 35%; most others reach 16-20%. Five states impose an inheritance tax (paid by beneficiaries, varying by relationship): Pennsylvania, New Jersey, Kentucky, Nebraska, and Iowa (the last fully repealed effective Jan 1, 2025). Maryland is the only state with both. New York's "cliff" provision is especially harsh: estates above 105% of the exemption are taxed on the ENTIRE estate.
Generation-Skipping Transfer (GST) Tax
The GST tax is a separate 40% flat tax on transfers to grandchildren or beneficiaries more than 37.5 years younger than the donor. It has its own $15M exemption under OBBBA, parallel to the estate-tax exemption, but the GST exemption must be affirmatively allocated to qualifying transfers. Without proper allocation (typically handled by your estate attorney), transfers to long-term dynasty trusts can incur GST tax IN ADDITION TO gift or estate tax, an effective combined rate as high as 64%. If you have grandchildren in your plan, GST allocation is essential.
Frequently Asked Questions
What is the federal estate tax exemption for 2026?
OBBBA (Pub. L. 119-21 §70106, signed July 4, 2025) made the $15,000,000 per-person federal estate and gift tax exemption PERMANENT starting tax year 2026. Without OBBBA, the exemption was scheduled to fall to roughly $7M on Jan 1, 2026. The top rate remains 40%. The amount is indexed for inflation in future years.
How does portability (DSUE) work for surviving spouses?
Portability lets a surviving spouse use any unused portion of the first-to-die spouse's $15M exemption (the Deceased Spousal Unused Exclusion). A married couple can shield up to $30M federally. The executor MUST file Form 706 for the first death to elect portability even if no tax is due. Rev. Proc. 2022-32 extends the late-election deadline to 5 years after death. Portability is federal-only, most states do not recognize it.
How does the lifetime gift exclusion interact with the estate tax?
The $15M exemption is a UNIFIED credit covering both lifetime taxable gifts and estate-at-death transfers. Every dollar of taxable gifts above the $19,000 annual exclusion reduces your remaining $15M at death. The annual exclusion is on top of the unified credit, you can give $19,000 to unlimited people each year with no filing required.
What is the 2026 annual gift tax exclusion?
$19,000 per donee per donor in 2026 ($38,000 with spousal gift-splitting). Gifts below this amount require no Form 709 filing and do not use your $15M lifetime credit. Direct payments of tuition and medical bills are also fully excluded under IRC §2503(e).
What is the step-up in basis at death?
IRC §1014 resets the cost basis of inherited appreciated assets to fair market value on the date of death. A stock bought at $10 now worth $100 passes at a $100 basis, eliminating the $90 built-in gain forever. Applies regardless of federal estate-tax liability. Primary reason to HOLD appreciated assets until death rather than sell.
What is the generation-skipping transfer (GST) tax?
A separate 40% flat tax on transfers to grandchildren or beneficiaries 37.5+ years younger than the donor. Has its own $15M exemption (parallel to estate tax under OBBBA) that must be affirmatively allocated. Without proper allocation, dynasty-trust transfers can incur GST tax ON TOP of gift/estate tax, an effective combined rate up to 64%.
Why does state estate tax often matter more than federal post-OBBBA?
With the federal exemption permanent at $15M ($30M per couple), almost no one owes federal estate tax. But 12 states + DC have an estate tax with exemptions FAR below federal: Oregon ($1M), Massachusetts ($2M), Minnesota/Washington ($3M), Illinois ($4M), Vermont/Maryland ($5M), New York ($7.16M), Maine ($7M), Hawaii ($5.49M), Rhode Island ($1.8M), DC ($4.71M), and Connecticut ($15M). State rates reach 16-20% (Washington 35%). 5 states have an inheritance tax (PA, NJ, KY, NE; IA repealed 2025). For a $10M estate in Oregon or Illinois, state tax can be hundreds of thousands.