Federal Estate Tax: 2026 Exemption, Rate and Filing Rules

The federal estate tax is charged only on the part of an estate that is above the basic exclusion amount. For people who die in 2026 that amount is $15,000,000 per person, up from $13,990,000 for 2025, and the top rate is 40%. Most estates are far below that line, so no federal tax is due and no federal return is required. The cases where a return is still worth filing, and the other taxes that can apply, are below.

What is the federal estate tax?

The IRS describes the estate tax as a tax on your right to transfer property at your death. It is not charged on each heir's share, and it isn't the same as an inheritance tax. The executor files the return, and under the tax code the executor pays any tax due, normally from estate assets before anything is distributed.

The IRS also says most relatively simple estates, such as cash, publicly traded securities and a few easily valued assets, don't require a federal estate tax return.

How much is the federal estate tax exemption?

The "exemption" is the basic exclusion amount. Here are the figures the IRS publishes for recent years.

The 2025 tax law (Public Law 119-21, signed on July 4, 2025) raised the 2026 figure to $15,000,000. The Internal Revenue Code now states that base amount directly and says it is adjusted for inflation for deaths after 2026, so it doesn't drop back down on a set date. Congress can change tax law, so check the IRS figures for the year of death.

The tax rate on the taxable amount above the exclusion is 40%. A married couple doesn't automatically get $30 million. Each spouse has their own exclusion, and the survivor can add the first spouse's unused amount only through the portability election described below.

Does the estate need to file a federal return?

A Form 706 is required when the gross estate, plus adjusted taxable gifts made during life and the specific gift tax exemption, is worth more than the filing threshold for the year of death. The threshold equals the basic exclusion amount: $15,000,000 for 2026 and $13,990,000 for 2025.

Two points surprise people:

• The filing test uses the gross estate. It is measured before debts, funeral costs and the marital deduction. An estate can need a return even if deductions would bring the tax to zero.
• A return can be optional but still useful. If the estate is below the threshold, the IRS says a return is still required to elect portability. That is the usual reason to file a Form 706 for a smaller estate.

What counts in the gross estate?

The IRS says the gross estate is an accounting of everything the person owned or had certain interests in at death, valued at fair market value, not what they paid. It includes non-probate property as well as what goes through the will. Typical items:

• real estate, cash, bank accounts, stocks, bonds and mutual funds
• retirement accounts, annuities and business interests
• interests in trusts
• life insurance when it is payable to the estate or the person held any "incidents of ownership," such as the right to change the beneficiary
• joint property: for spouses who hold property as joint tenants with survivorship or as tenants by the entirety, half is included. For other joint owners, the full value is included unless the survivor can show their own contribution
• lifetime taxable gifts, which are added when the tax is computed

The estate usually values each asset on the date of death. The executor may elect an alternate valuation date six months after death, but only if the election reduces both the gross estate and the estate tax. See our guide to valuing an estate for how each type of asset is valued.

What reduces the tax?

The IRS says the gross estate is reduced by certain deductions to reach the taxable estate:

• mortgages and other debts the person owed
• estate administration expenses
• funeral expenses (Schedule J on Form 706)
• property that passes to a surviving spouse, called the marital deduction. The IRS says property that passes outright to the spouse qualifies, and special rules apply if the spouse isn't a US citizen
• gifts to qualifying charities
• state death taxes the estate actually paid, which are deductible under section 2058 of the tax code

Lifetime gifts matter as well. The annual gift tax exclusion is $19,000 per recipient for both 2025 and 2026. Larger gifts require a gift tax return and use up part of the lifetime exclusion, and those taxable gifts are counted again when the estate tax is figured.

What is portability?

Portability lets a surviving spouse use the part of the first spouse's exclusion that wasn't used. The IRS calls it the deceased spousal unused exclusion, or DSUE. It is elected only by filing a timely Form 706 for the spouse who died, even if the estate is under the filing threshold.

If the estate wasn't required to file and missed the normal deadline, the IRS offers a simplified late-election method under Revenue Procedure 2022-32. The estate must file a complete Form 706 on or before the fifth anniversary of the date of death with a specific notation at the top, and there is no user fee. If the estate was required to file, that relief doesn't apply.

Whether to elect portability depends on the surviving spouse's likely assets, state rules and future law, so it is a good question for an estate tax attorney or CPA.

When is Form 706 due and how do you file it?

The return is due nine months after the date of death. The estate can get an automatic six-month extension to file by submitting Form 4768 on or before the due date. The IRS stresses that the correct amount of tax is still due by the original date, and interest accrues on anything unpaid.

A typical order of work looks like this:

1. List and value every asset. Use statements, appraisals and market data. Our estate inventory checklist lists what to collect.
2. Get an EIN and file Form 56 if you haven't. These give the estate its own tax ID and tell the IRS who the fiduciary is. Our guide to what an executor does covers them.
3. Gather the attachments. The IRS lists copies of the will and trusts, appraisals, and Forms 709 for any earlier gifts.
4. Complete and file Form 706 and pay any tax by the nine-month date.
5. Send Form 8971 if required. Estates that must file give the IRS and each beneficiary a statement of the estate tax value of the property they receive, within 30 days after the earlier of the return's due date (including extensions) or the date it is filed. Publication 559 says an executor who files only to elect portability or make a generation-skipping transfer tax election doesn't need to file Form 8971, and the IRS says not to file it if the estate isn't required to file a Form 706.
6. Ask for the closing letter. After you file, the IRS processes the return. Request an estate tax closing letter through Pay.gov at least nine months after filing, unless the account transcript already shows the return was accepted. The user fee is $56 for requests made on or after May 21, 2025. An IRS account transcript can stand in for the letter.

How does the step-up in basis work?

Property inherited from a decedent generally gets a new tax basis equal to its fair market value on the date of death. If an heir sells soon after, there is usually little or no capital gain to report, even if the person bought it decades earlier. For the sale of a house, see our guide to selling a house after death.

The IRS adds a rule for estates that had to file a Form 706. Heirs must use the value finally reported on the estate tax return as their starting basis, which is why Form 8971 exists. Inherited traditional IRAs are different. The IRS says distributions from them are generally taxable income, because they are treated as income in respect of a decedent. Our guide to 401(k) and IRA accounts after death explains it.

Do states charge their own estate tax?

Often the state tax is the one that matters. Twelve states and the District of Columbia have an estate tax, and five states have an inheritance tax, with some thresholds as low as $1 million. A family can owe a state return with no federal return. Our guide to estate tax by state lists thresholds and due dates for each.

The estate tax is a different thing from the income taxes an executor handles, such as the final Form 1040 and the estate's Form 1041. The IRS says inherited property isn't counted as the heir's income. See our US probate guide for the wider process.

What to do next

1. Add up the gross estate, including life insurance, retirement accounts, jointly held property and trusts, to see whether it comes near $15,000,000.
2. If there is a surviving spouse, ask a tax professional whether to file a Form 706 to elect portability, and note the nine-month date.
3. Check whether the person's state has its own estate or inheritance tax.
4. If the estate may owe tax, ask the IRS and your state about extension and payment options before the due date.