How federal estate tax is figured
Taxable estate = gross estate − deductions (debts, funeral and administration expenses, the marital deduction, charitable gifts and state death taxes). Adjusted taxable gifts made after 1976 are added back, and the tentative tax on that total comes from the unified rate schedule (Table A in the Form 706 instructions). Gift tax payable on those gifts is subtracted, then the applicable credit, which is the tentative tax on the exclusion amount.
For deaths in 2026 the basic exclusion is $15,000,000 (IRS). A surviving spouse can add the deceased spouse's unused exclusion (DSUE) if it was elected on the earlier return. Above the exclusion the effective rate is 40%.
| Taxable amount over | Not over | Tax on lower amount | Rate on excess |
|---|---|---|---|
| $0 | $10,000 | $0 | 18% |
| $10,000 | $20,000 | $1,800 | 20% |
| $20,000 | $40,000 | $3,800 | 22% |
| $40,000 | $60,000 | $8,200 | 24% |
| $60,000 | $80,000 | $13,000 | 26% |
| $80,000 | $100,000 | $18,200 | 28% |
| $100,000 | $150,000 | $23,800 | 30% |
| $150,000 | $250,000 | $38,800 | 32% |
| $250,000 | $500,000 | $70,800 | 34% |
| $500,000 | $750,000 | $155,800 | 37% |
| $750,000 | $1,000,000 | $248,300 | 39% |
| $1,000,000 | — | $345,800 | 40% |
Worked example
A $20,000,000 gross estate with $250,000 of debts and expenses has a taxable estate of $19,750,000. Tentative tax = $345,800 + 40% × ($19,750,000 − $1,000,000) = $7,845,800. The credit on a $15,000,000 exclusion is $345,800 + 40% × $14,000,000 = $5,945,800. Estimated tax = $1,900,000, or 9.5% of the gross estate.
Limits of this estimate
This is not legal or tax advice. It does not refigure prior gift tax at date-of-death rates, and it skips the generation-skipping transfer tax, other credits, special-use valuation and state estate or inheritance taxes, which some states levy at much lower thresholds.