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The estate tax is a tax on a person's assets after death. In 2021, federal estate tax generally applies to assets over $11.7 million. Estate tax rate ranges from 18% to 40%. Some states also have estate taxes. Assets spouses inherit generally aren't subject to estate tax.
has the details on exactly which assets count in the calculations, how to find their value and how to figure the tax. But in general, you figure the tax by applying the rates below to the amount of the estate that's subject to tax. See a qualified tax professional if you have questions.
Probably not. The IRS exempts estates of less than $11.7 million from the tax in 2021 (up from $11.58 million in 2020), so few people actually end up paying it. Plus, that exemption is per person, so a married couple could double it. The IRS taxes estates above that threshold at rates of up to 40%.
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A handful of states also impose estate taxes at various income thresholds.
Several states and the District of Columbia have an estate tax. Many have lower asset thresholds than the federal government. Each state’s exclusion amount is in the table below.
If you live in a state with an estate tax, the good news is that (generally speaking) your estate tax bill is subtracted from the value of your taxable estate before you calculate what you might owe the IRS.
A few states have an , which is different because heirs pay the tax.
If you want to before you die, there are some tactics you might use to protect your property. They include:
Even if an inheritance isn't taxed when your heirs receive it, any subsequent earnings or income that it produces may be considered at the federal and state levels.