The Federal Estate Tax Calculator is a utility designed to estimate the tax liability of a decedent’s estate in the United States. It determines the net taxable value by subtracting liabilities, expenses, and eligible deductions from the gross estate, then applying the federal lifetime exemption and tax rate.

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Understanding the Federal Estate Tax

The federal estate tax is a tax on the transfer of the estate of a deceased person. It applies to the “Gross Estate,” which includes all property the decedent had an interest in at the time of death, such as real estate, trusts, annuities, and business interests. The tax is levied only on the portion of the estate that exceeds the federal lifetime exemption.

Because the exemption limit is historically high, the vast majority of estates in the United States do not owe any federal estate tax. However, for high-net-worth individuals, the tax rate on amounts exceeding the exemption is currently a flat 40%.

Calculation Formula

The mathematical approach to determining the tax liability involves three distinct steps: determining the Net Estate, calculating the Taxable Amount, and applying the Tax Rate.

If the Net Estate is less than the Lifetime Exemption, the Taxable Estate is considered zero, and no federal tax is owed.

Exemption Limits and the 2026 Sunset

The Tax Cuts and Jobs Act (TCJA) of 2017 significantly doubled the basic exclusion amount. However, these provisions are temporary and scheduled to “sunset” on December 31, 2025.

Unless Congress enacts new legislation, the exemption will revert to pre-2018 levels (approximately $5 million adjusted for inflation) starting in 2026. This creates a “use it or lose it” scenario for wealthy individuals planning their estates.

See Also

• Income Tax Comparison: India vs US – A comparative analysis of tax burdens.
• 401(k) Retirement Calculator – Estimating savings growth with employer matching.
• Value Added Tax (VAT) Calculator – Understanding consumption taxes globally.