Inheritance Tax Calculator

Inheritance tax (also called estate tax in the US) is levied on assets transferred from a deceased person to their beneficiaries. The rules vary dramatically by country and, in the US, by state. Understanding the threshold and rate structure helps families plan to minimize tax liability through trusts, gifting strategies, and proper estate documentation.

Estate tax formula (US federal): Taxable Estate = Gross Estate − Deductions (debts, funeral costs, charitable bequests, marital deduction)

Tax Owed = (Taxable Estate − Exemption) × Applicable Rate (if Taxable Estate > Exemption)

Where:

• Gross Estate — fair market value of all assets at date of death (real estate, investments, retirement accounts, life insurance proceeds if policy is owned by decedent, business interests)
• Exemption — amount shielded from tax; US federal exemption: $13.61 million per individual (2024); married couples can combine to $27.22 million
• Applicable Rate — graduated rates up to 40% on amounts over the exemption
• Marital Deduction — transfers between US spouses are 100% tax-free (unlimited marital deduction)

US federal estate tax rates (2024) on amounts above exemption:

• Over $10,000: 18%
• Over $40,000: 20%
• Over $240,000: 26%
• Over $440,000: 30%
• Over $640,000: 32%
• Over $840,000: 34%
• Over $1,040,000: 37%
• Over $1,540,000: 39%
• Over $1,000,000 (above exemption): 40% flat rate

Worked example: Estate value: $18,000,000. Debts and funeral costs: $200,000. No surviving spouse.

• Taxable estate: $18,000,000 − $200,000 = $17,800,000
• Exemption: $13,610,000
• Amount subject to tax: $17,800,000 − $13,610,000 = $4,190,000
• Federal estate tax owed: $4,190,000 × 40% = $1,676,000

Note: Six US states (Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania) also have state-level inheritance taxes, often with lower exemptions ($25,000–$1 million). Proper trust structures can significantly reduce or eliminate this liability.