An estate tax is most Read this article notably levied at the federal level, and it’s charged to a decedent’s estate before their assets pass on to their beneficiaries. Most estates won’t trigger the federal estate tax though, as it only applies to estates worth more than $13.99 million in 2025, minus any applicable gifts. Because this tax can have a significant effect on your beneficiaries, it’s best to plan for it in your estate plan if you think your estate may trigger it.
What Is the Federal Estate Tax?
The estate tax is levied by the government on estates when you die and pass on your assets to heirs. If your estate has a high enough value after you pass away, then you’ll have to pay estate taxes on anything you’re looking to bequeath. This could include cash, real estate, retirement accounts or a range of other assets.
For 2025, the federal estate tax threshold is $13.99 million for individuals, which means married couples don’t have to pay estate if their estate is worth $27.98 million or less. For 2024, the threshold was $13.61 million for individuals and $27.22 million for married couples.
Federal Estate Tax Rates for 2025
To make things simple, if someone passes away in 2025 and their estate is worth $13.99 million or less, they don’t need to worry about the federal estate tax. However, any estates worth more than that are taxed only on the amount that surpasses the $13.99 million threshold. For all but the first federal estate tax tier, you pay both a base tax charge and an additional marginal rate. Federal estate tax rates max out at 40% for amounts higher than $1 million.
Which States Levy an Estate Tax?
If you die as a resident of certain parts of the country, your estate may also be subject to a state tax. As of 2025, Washington, Oregon, Minnesota, Illinois, Maryland, Vermont, Connecticut, New York, Rhode Island, Massachusetts, Maine, Hawaii and the District of Columbia all levy estate taxes. That means that the estates of people who live in these states may face estate taxes at both the federal and state levels.
The aforementioned states’ estate tax thresholds range from $1 million in Oregon to $13.99 million in Connecticut. Rates also vary, so be sure to check your state’s website to see what you could pay.
Understanding the Estate Tax Exemption
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In 2011, estates and lifetime gifts had a combined exemption of $5 million in
asset value, indexed for inflation. This exemption was made permanent in 2013 and was
$5.49 million for an individual or twice that for a couple for 2017.
However, the tax plan that President Trump signed in December 2017 increased that exemption to $11.18 million for the tax year 2018. The exemption rose to $11.4 million for 2019, $11.58 million for 2020, $11.7 million for 2021, $12.06 million for 2022, $12.92 million for 2023 an $13.61 million for 2024. For tax year 2025, the exemption is $13.99 million. If your estate is in the ballpark of the estate tax limits and you want to leave the maximum amount to your heirs, you’ll want to do some estate tax planning.
If you’re in charge of paying estate taxes for a deceased loved one, you might want to enlist a tax accountant and an estate lawyer to help you shoulder that burden. In addition to estate taxes, you may need to file separate income taxes for the estate if their estate is generating income above IRS limits. To file a U.S. estate tax return, you’ll need a tax ID number for the estate. An estate’s tax ID number is called an “employer identification number” or EIN. You can apply for a number online, by mail or by fax.
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