An Interactive Guide to U.S. Estate Tax
Based on Form 706, this tool simplifies the key tax benefits that can reduce or eliminate the federal estate tax. See how deductions and credits work together to protect an estate's value.
How Estate Tax is Reduced
Deductions
Deductions directly reduce the value of the gross estate. This smaller value, the "taxable estate," is what the tax is calculated on. Common deductions include transfers to a surviving spouse or charity.
Credits
After the tax is calculated, credits are applied to directly reduce the tax owed. The Applicable Credit is so large that most estates end up paying zero tax.
Estate Tax Estimator
Enter a sample gross estate value and potential deductions to see how the final tax liability is calculated. The chart and summary will update instantly.
Key Concepts Explained
The Applicable Exclusion Amount is the dollar value of assets an individual can give away during their lifetime or transfer at death without having to pay federal gift or estate tax. For decedents dying in 2024, this amount is **$13.61 million**. This translates into the "Applicable Credit," which is a dollar-for-dollar reduction of the estate tax. For 2024, the credit is **$5,389,800**, which is the amount of tax that would be due on a $13.61 million estate.
"Portability" allows a surviving spouse to use the Deceased Spousal Unused Exclusion (DSUE) amount from their last deceased spouse. If a spouse dies without using their full lifetime exemption, the executor of their estate can file Form 706 to transfer the unused portion to the surviving spouse. This allows the couple to fully utilize both of their exemptions, potentially shielding up to $27.22 million (in 2024) from estate tax.