Question 1

Who has to pay federal estate tax?

Accepted Answer

Only estates with a gross value exceeding the federal estate tax exemption are subject to estate tax. In 2025, the exemption is $13.99 million per individual. This means fewer than 1% of estates owe any federal estate tax. The tax is paid by the estate itself before assets are distributed to heirs — not by the heirs directly.

Question 2

What is the 2025 federal estate tax exemption?

Accepted Answer

The 2025 federal estate tax exemption is $13,990,000 per individual. Married couples can effectively double this to $27,980,000 through "portability" — the surviving spouse can use any unused portion of the deceased spouse's exemption. This exemption is scheduled to be roughly cut in half after 2025 unless Congress extends it, reverting to around $7 million (adjusted for inflation).

Question 3

What is portability and how does it work?

Accepted Answer

Portability allows a surviving spouse to use the unused portion of the deceased spouse's estate tax exemption (called the "DSUE amount"). To elect portability, the executor must file a timely estate tax return (Form 706) for the first deceased spouse, even if no tax is owed. Once elected, the surviving spouse can use up to $27.98 million in combined exemption (2025).

Question 4

What is the difference between gift tax and estate tax?

Accepted Answer

Gift tax and estate tax are part of a unified transfer tax system — they share the same $13.99M lifetime exemption. Gifts made during your lifetime reduce the exemption available for your estate at death. The annual gift tax exclusion ($19,000 per recipient in 2025) does not count against the lifetime exemption. Both taxes use the same graduated rate schedule of 18% to 40%.

Question 5

Do any states have their own estate tax?

Accepted Answer

Yes. As of 2025, 12 states and the District of Columbia impose their own estate tax with exemptions much lower than the federal exemption — ranging from about $1 million (Oregon, Massachusetts) to $7.1 million (New York). Six states also impose an inheritance tax on the recipients. This calculator estimates federal estate tax only; check your state's rules separately.

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