Estate Tax Calculator: Federal + State Exposure for 2026

How it's calculated

Estate tax has three layers in 2026: federal, state estate tax, and state inheritance tax.

Federal estate tax is 40% flat on any amount above the exemption. The 2026 exemption is $15M per individual, made permanent and indexed under the One Big Beautiful Bill Act (P.L. 119-21, signed July 2025), which amended IRC §2010(c)(3). Married couples can shield up to $30M by combining exemptions via portability — the surviving spouse elects the deceased spouse's unused exemption on a timely-filed Form 706. The GST tax exemption mirrors at $15M, and the annual gift tax exclusion is $19,000 per donee (non-citizen spouse $194,000).

State estate tax hits at much lower thresholds. Twelve states plus DC impose one in 2026: Oregon starts at $1M (the lowest), Rhode Island at $1.84M (indexed), Massachusetts at $2M, Minnesota and Washington at $3M (Washington's rate resets from 35% to 20% on July 1, 2026), Illinois at $4M, DC at $4.99M, Maryland at $5M (also has inheritance tax), Vermont at $5M, Hawaii at $5.49M, Maine at $7M, New York at $7.35M, and Connecticut at $15M (tied to federal). Rates run 10–20%. New York uniquely applies a 105% cliff: estates over 105% of the exemption are taxed from dollar one, not just the excess — the calculator above flags this explicitly.

Naming the state makes the exposure concrete instead of abstract. California, Texas, and Florida impose no state estate tax at all, so an estate that clears only the federal $15M exemption owes $0 state estate tax in those states no matter how large it is — the federal calculation is the whole story there. Massachusetts and Oregon have the lowest state exemption thresholds in the country: a $3M single-filer estate in Massachusetts (the $2M exemption) has $1M of taxable excess, and the same $3M estate in Oregon (the $1M exemption) has $2M of taxable excess. Washington and Minnesota share a $3M threshold, so a $4M estate in either state has $1M of taxable excess (Washington's rate is also scheduled to reset from 35% to 20% on July 1, 2026, as noted above). Illinois's $4M exemption means a $5M Illinois estate has $1M of taxable excess. Maryland's $5M estate-tax exemption means a $6M Maryland estate has $1M of taxable excess before its separate inheritance tax on non-exempt beneficiaries is even factored in. New York's $7.35M exemption comes with the 105% cliff described above: a $9M New York estate is well past the $7.72M cliff line (105% of $7.35M), so the entire $9M — not just the amount above the exemption — gets taxed from dollar one. The takeaway: run your actual state through the calculator above rather than assuming the federal $15M figure is the only ceiling that applies to you.

State inheritance tax hits beneficiaries directly and depends on relationship, not estate size. Five states impose one in 2026 (Iowa repealed 2025): Kentucky (Class A exempt, Class B exempt in 2026, Class C 6–16%), Maryland (10% flat on non-exempt), Nebraska (1%/11%/15% by class), New Jersey (Class A exempt, Class C 11–16%, Class D 15–16%), and Pennsylvania (0% spouse/minor, 4.5% lineal, 12% sibling, 15% other). Non-lineal beneficiaries (siblings, nieces/nephews, friends, unmarried partners) pay the most.

Estate tax vs inheritance tax, compared directly: estate tax is owed BY the estate itself, calculated on the total value before any distribution, and depends on the size of the estate — the beneficiary's relationship to the decedent doesn't matter. Inheritance tax is owed BY each beneficiary individually, calculated on what that person actually receives, and depends entirely on their relationship to the decedent — a spouse or child often pays 0% while a friend or distant relative can pay 15% or more on the identical inheritance. Maryland is the only state that imposes both. The practical takeaway: if you're the one drafting the estate plan, estate tax is the number that determines whether you need portability and gifting strategies; if you're a named beneficiary in Kentucky, Maryland, Nebraska, New Jersey, or Pennsylvania, inheritance tax is the number that determines what you personally keep, and it can apply even to estates far too small to owe any estate tax at all.

Estate tax planning combines three tools: portability (Form 706 election), lifetime gifting to use the $19,000 annual exclusion, and irrevocable trusts (ILIT for life insurance, dynasty trusts for generational transfers). See the living trust cost calculator for irrevocable trust costs, and the estate planning hub for the specific plan tier your net worth calls for.

How estate tax is actually calculated and filed: the taxable estate is gross estate minus allowable deductions, not simply net worth. The marital deduction (IRC §2056) is unlimited for assets passing to a surviving spouse who is a US citizen, which is why many married couples owe $0 federal estate tax at the first death regardless of size. The charitable deduction (IRC §2055) removes the value of any bequest to a qualifying charity from the taxable estate dollar-for-dollar. Administration expenses — executor and attorney fees, court costs, and the decedent's enforceable debts — are deductible under IRC §2053. These deductions, not the exemption alone, are why the taxable estate reported on Form 706 is often well below gross estate value.

Form 706 itself is due 9 months after death, with a 6-month extension available on Form 4768. Filing late without an approved extension triggers a failure-to-file penalty under IRC §6651 of 5% of the unpaid tax per month or part of a month the return is late, capped at 25%, plus a separate failure-to-pay penalty of 0.5% per month (also capped at 25%) and interest that accrues from the original due date. Missing the deadline can also permanently forfeit elections available only on a timely-filed return — including the portability election described above, the alternate-valuation election, and QTIP elections.

If an error or new information surfaces after Form 706 has already been filed — a late-discovered asset, a corrected appraisal, additional administration expenses — the fix isn't a separate amended-return form. The executor instead files a supplemental Form 706, marked "Supplemental Information" at the top with copies of the first four pages of the original return attached, and — if the correction produces an overpayment — requests the refund on Form 843 (Claim for Refund and Request for Abatement) rather than through Form 706 itself.

A worked example

Take the calculator's default: an $8,500,000 net worth for a married couple in New York. Federal analysis: combined exemption is $15M × 2 = $30M via portability.

Taxable estate = max(0, $8.5M − $30M) = $0. Federal tax = $0.

State analysis: New York exemption is $7.35M. $8.5M ÷ $7.35M = 1.156 = 115.6% — well above the 105% cliff threshold ($7.35M × 1.05 = $7.72M).

Because the estate exceeds 105% of the exemption, the ENTIRE $8.5M is taxed from dollar one at rates up to 16%: roughly $8.5M × 0.16 = $1,360,000 New York estate tax. Total tax: $1.36M.

To heirs: $7.14M. The lesson: New York residents just over the cliff should model lifetime gifting or a Qualified Personal Residence Trust (QPRT) to bring the taxable estate below $7.72M.

Common mistakes to avoid

• Assuming the $15M federal exemption is permanent for you. It is permanent under OBBBA, but portability requires a timely Form 706 filing at the first spouse's death. Missing the deadline (9 months from death, plus 6-month extension) loses the DSUE amount forever.
• Ignoring state estate tax. Oregon $1M and Massachusetts $2M thresholds mean many homeowners with retirement accounts and life insurance are exposed even at moderate net worths, while their federal exposure is $0.
• Not planning around the New York 105% cliff. Estates just over 105% of the $7.35M exemption owe tax on the entire estate, not just the excess. Bringing the taxable estate below the cliff via gifting can save hundreds of thousands.
• Confusing estate tax with inheritance tax. Estate tax is paid BY the estate before distribution; inheritance tax is paid BY beneficiaries based on their relationship. Maryland is the only state with both.
• Forgetting life insurance is in the taxable estate. Life insurance death benefits are includable if the decedent held any 'incidents of ownership' (right to change beneficiary, cash out, etc.). An ILIT removes them.
• Missing the 3-year rule on ILIT transfers. If you transfer an existing life insurance policy to an ILIT and die within 3 years (IRC §2035(a)), the proceeds are still in your taxable estate. New policies issued directly to the ILIT are cleaner.

Frequently asked questions

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