Navigating estate and inheritance taxes

Estate planning requires considering both federal and state tax rules, which can affect how your assets are transferred to your beneficiaries. Because tax laws and exemption amounts can change, it’s important to understand which rules may apply to your estate.

Federal Estate Tax

Federal estate tax exemption

For individuals who die in 2025, the federal estate tax basic exclusion amount is $13.99 million per individual.

Beginning in 2026, the basic exclusion amount increases to $15 million per individual under current federal law.

Married couples may be able to take advantage of both spouses’ individual exemptions through proper estate planning and portability rules.

Filing requirements

Generally, a federal estate tax return (Form 706) must be filed if the value of a person’s gross estate, plus certain adjusted taxable gifts and exemptions, exceeds the applicable filing threshold for the year of death.

Form 706 is generally due nine months after the date of death, although an extension may be available.

In some cases, an estate may also file Form 706 even when it is below the filing threshold. For example, filing may be necessary to elect portability, which can allow a surviving spouse to use a deceased spouse’s unused exclusion amount.

Federal estate tax rates

Federal estate tax uses a graduated tax rate structure, with a top rate of 40%.

State Estate and Inheritance Taxes

Federal estate tax isn’t the only tax to consider. Some states impose their own estate tax, inheritance tax, or both, and their exemption thresholds and tax rates may differ significantly from federal rules.

Whether these taxes apply can depend on factors such as where you live, where you own property, the size of your estate, and who inherits your assets.

Because state laws vary and can change, check your state’s Department of Revenue or other appropriate tax authority for current requirements. You may also want to consult with an estate planning attorney or qualified tax professional.

Planning for the Future

Estate and inheritance tax laws can be complex and may change over time. If your estate may be subject to federal or state estate taxes, consider working with a qualified estate planning or tax professional. They can help you understand how current laws apply to your circumstances and explore strategies that support your estate planning goals.

This information is provided for educational purposes only and is not intended as legal or tax advice. Tax laws are subject to change. Consider consulting a qualified attorney or tax professional about your individual circumstances.

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