Estate Tax Calculator - Federal & State Estate Tax Planning Tool

Plan your legacy and minimize estate taxes with our comprehensive calculator. Calculate federal and state estate taxes, generation-skipping transfer tax, and discover strategies to preserve more wealth for your heirs.

Understanding Estate Taxes in 2025

Estate taxes are federal and state taxes imposed on the transfer of wealth at death. With proper planning, many families can significantly reduce or eliminate these taxes.

Federal Estate Tax Overview

2025 Federal Estate Tax Exemption

• Individual exemption: $13.61 million per person
• Married couple: $27.22 million combined (with proper planning)
• Tax rate: 40% on amounts above exemption
• Portability: Surviving spouse can use deceased spouse's unused exemption

Key Changes Coming in 2026

• Exemption reduction: Current exemptions sunset after 2025
• Estimated 2026 exemption: ~$6-7 million per person
• Planning window: Limited time to use current high exemptions

State Estate Taxes by State

States with Estate Taxes (2025)

Not all states impose estate taxes. Here are the states that do:

Major Estate Tax States

• Connecticut: $12.92M exemption, up to 12% tax rate
• Hawaii: $5.49M exemption, up to 20% tax rate
• Illinois: $4.0M exemption, up to 16% tax rate
• Maine: $6.41M exemption, up to 12% tax rate
• Maryland: $5.0M exemption, up to 16% tax rate
• Massachusetts: $2.0M exemption, up to 16% tax rate
• Minnesota: $3.0M exemption, up to 16% tax rate
• New York: $6.94M exemption, up to 16% tax rate
• Oregon: $1.0M exemption, up to 16% tax rate
• Rhode Island: $1.73M exemption, up to 16% tax rate
• Vermont: $5.0M exemption, up to 16% tax rate
• Washington: $2.19M exemption, up to 19% tax rate
• District of Columbia: $4.52M exemption, up to 16% tax rate

State Tax Planning Considerations

• Domicile planning: Consider relocating to no-estate-tax states
• Multi-state issues: Property in estate tax states may be taxable
• State-specific deductions: Some states offer different deductions

Generation-Skipping Transfer (GST) Tax

What is GST Tax?

The GST tax is an additional 40% tax on transfers to beneficiaries who are two or more generations younger than the donor (typically grandchildren).

2025 GST Tax Exemption

• Individual exemption: $13.61 million (same as estate tax)
• Married couple: $27.22 million combined
• Tax rate: 40% flat rate on amounts above exemption

GST Tax Triggers

• Direct skips: Outright gifts to grandchildren
• Taxable distributions: From trusts to skip persons
• Taxable terminations: When trust interests terminate

Estate Tax Calculation Process

Step 1: Determine Gross Estate

The gross estate includes:

• All assets owned at death (real estate, investments, business interests)
• Life insurance proceeds (if deceased owned the policy)
• Retirement accounts (401k, IRA, etc.)
• Jointly owned property (portion based on contribution)
• Certain gifts made within 3 years of death

Step 2: Apply Deductions

Common deductions include:

• Marital deduction: Unlimited for assets passing to U.S. citizen spouse
• Charitable deduction: Full deduction for qualifying charitable bequests
• Administrative expenses: Funeral costs, legal fees, executor fees
• Debts and mortgages: Outstanding liabilities

Step 3: Calculate Taxable Estate

Taxable Estate = Gross Estate - Deductions

Step 4: Apply Gift Tax History

• Add lifetime taxable gifts above annual exclusion
• Subtract available exemption (federal and state)
• Calculate tax on remaining amount

Advanced Estate Planning Strategies

Valuation Discounts

Reduce estate value through legitimate business structures:

Family Limited Partnerships (FLPs)

• Marketability discounts: 10-30% typical range
• Minority interest discounts: Additional 10-20%
• Requirements: Legitimate business purpose, proper operation

Limited Liability Companies (LLCs)

• Similar benefits to FLPs
• Easier administration than partnerships
• Flexibility in management structure

Grantor Trusts

Remove growth from estate while retaining some benefits:

Grantor Retained Annuity Trusts (GRATs)

• Transfer growth to beneficiaries
• Retain annuity payments during term
• Ideal for appreciating assets

Charitable Lead Annuity Trusts (CLATs)

• Reduce gift/estate tax on transfers to heirs
• Provide income to charity for term
• Particularly effective in low interest rate environments

Sales to Intentionally Defective Grantor Trusts (IDGTs)

• Sell assets to trust for note
• Pay income taxes on trust income (additional gift)
• Remove future appreciation from estate

Life Insurance Strategies

Irrevocable Life Insurance Trusts (ILITs)

• Remove life insurance from taxable estate
• Provide liquidity for estate tax payments
• Benefit multiple generations

Split-Dollar Arrangements

• Share premium costs with trust or family member
• Reduce gift tax on premium payments
• Maintain some policy benefits

Charitable Giving Strategies

Charitable Remainder Trusts (CRTs)

• Receive income for life or term
• Estate tax deduction for remainder value
• Avoid capital gains on appreciated property

Charitable Lead Trusts (CLTs)

• Reduce gift/estate taxes on family transfers
• Support charitable causes during trust term
• Pass assets to heirs at reduced tax cost

Private Foundations

• Perpetual charitable vehicle
• Family involvement in philanthropy
• Significant tax benefits

Annual Gifting Programs

2025 Annual Exclusions

• Per recipient: $18,000 ($36,000 for married couples)
• Medical/education: Unlimited if paid directly to provider
• No limit on number of recipients

Strategic Annual Gifting

• Reduce estate size systematically over time
• Use discounted values for business interests
• Leverage with appreciating assets

Estate Tax vs Inheritance Tax

Estate Tax

• Paid by estate before distribution
• Based on total estate value
• Federal and some state levels

Inheritance Tax

• Paid by beneficiaries upon receipt
• Based on relationship to deceased
• Only certain states impose inheritance taxes

States with Inheritance Tax

• Iowa (being phased out)
• Kentucky
• Maryland (also has estate tax)
• Nebraska
• New Jersey
• Pennsylvania

Estate Planning for Business Owners

Business Succession Planning

• Buy-sell agreements with valuation formulas
• Installment sales to family members
• Employee Stock Ownership Plans (ESOPs)

Valuation Considerations

• Professional appraisals essential for discounts
• Regular updates needed for changing values
• IRS scrutiny of aggressive positions

Family Business Strategies

• Recapitalization to separate growth from control
• Installment sales with self-canceling notes
• Charitable strategies for partial exits

Common Estate Planning Mistakes

Failing to Plan

• No will or trust leaves decisions to state law
• Outdated documents may not reflect current wishes
• Missing beneficiary designations on retirement accounts

Inadequate Liquidity

• Estate tax due 9 months after death
• Forced asset sales at unfavorable prices
• Life insurance solutions often overlooked

Poor Gift Timing

• Waiting too long to start gifting programs
• Not leveraging current high exemptions
• Missing annual exclusions

Ignoring State Law

• Multi-state complications not addressed
• State-specific planning opportunities missed
• Domicile issues not resolved

Professional Team Assembly

Essential Professionals

• Estate planning attorney: Document preparation and strategy
• Tax advisor/CPA: Tax compliance and planning
• Financial advisor: Investment and insurance planning
• Appraiser: Business and asset valuations

When to Seek Help

• Estate over $5 million: Professional guidance recommended
• Complex assets: Business interests, real estate, collectibles
• Multi-generational planning: GST tax considerations
• Charitable interests: Advanced giving strategies

Estate Tax Planning Checklist

Immediate Actions

• ✅ Calculate current estate value using our calculator
• ✅ Review beneficiary designations on all accounts
• ✅ Consider annual gifting program
• ✅ Evaluate life insurance needs and ownership

Medium-Term Planning

• ✅ Implement valuation discounts for business interests
• ✅ Consider grantor trusts for appreciating assets
• ✅ Plan charitable giving strategies
• ✅ Review state domicile implications

Advanced Strategies

• ✅ Utilize current high exemptions before 2026 sunset
• ✅ Implement generation-skipping strategies
• ✅ Consider family limited partnerships
• ✅ Plan business succession strategies

Maximizing Your Estate Planning

Use our calculator to:

• 💰 Calculate total tax liability across federal, state, and GST taxes
• 📊 Compare strategies and their tax impact
• 🎯 Identify planning opportunities based on your situation
• 💡 Understand exemption changes and timing considerations
• 📈 Plan optimal wealth transfer strategies

Don't let estate taxes erode your family's wealth - start planning today with our comprehensive estate tax calculator!

Disclaimer: This calculator provides estimates for educational purposes. Estate tax planning involves complex legal and tax considerations that vary by state and individual circumstances. Consult with qualified estate planning professionals for personalized advice.