The federal estate tax exemption amount went up again for 2024. A higher exemption means more estates may be exempt from the federal tax this year, which can save heirs from a hefty tax bill.
The amount is inflation-adjusted by the IRS each year. So, while the increase probably isn’t a surprise, it’s still a big deal for many wealthy taxpayers.
Estate tax exemption 2024
Typically, heirs won’t pay the federal estate tax unless the value of your estate exceeds the exemption amount. For people who pass away in 2024, the exemption amount is $13.61 million (up from $12.92 million last year).
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Each spouse can take advantage of the exemption, which means the combined exemption amount jumps to $27.22 million for married couples.
Federal estate tax rate
Given the high estate tax exemption amount, only a small percentage of estates are subject to the federal estate tax. However, estates valued at more than the exemption amount are taxed at a hefty rate, with values exceeding the exemption amount by more than $1 million ($14.61 million or $28.22 million combined for married couples) taxed at 40%.
Here’s how much your heirs can expect to pay based on the value of your estate.
| Rate | Taxable Amount (Value of Estate Exceeding Exemption) |
|---|---|
| 18% | $0 to $10,000 |
| 20% | $10,001 to $20,000 |
| 22% | $20,001 to $40,000 |
| 24% | $40,001 to $60,000 |
| 26% | $60,001 to $80,000 |
| 28% | $80,001 to $100,000 |
| 30% | $100,001 to $150,000 |
| 32% | $150,001 to $250,000 |
| 34% | $250,001 to $500,000 |
| 37% | $500,001 to $750,000 |
| 39% | $750,001 to $1 million |
| 40% | More than $1 million |
Estate tax exemption sunset
While the estate tax exemption amount increases each year due to inflation, it jumped considerably in 2018, from $5.49 million to $11.8 million. But there is some bad news for heirs of wealthy estates.
That’s because the considerable increase from six years ago (due to the Tax Cuts and Jobs Act) is only temporary, and the base estate exemption amount is set to drop back down to $5 million (adjusted for inflation) in 2026.
However, most tax-free gifts made before the lifetime gift and estate tax exemption drops won’t trigger higher tax bills in 2026 and beyond.
| Period | Exemption Amount |
|---|---|
| 2017 | $5,490,000 |
| 2018 | $11,180,000 |
| 2019 | $11,400,000 |
| 2020 | $11,580,000 |
| 2021 | $11,700,000 |
| 2022 | $12,060,000 |
| 2023 | $12,920,000 |
| 2024 | $13,610,000 |
State estate taxes
Just because the value of your estate falls below the 2024 federal estate tax exemption amount doesn’t mean you won’t get hit with a tax bill. That’s because some states impose an estate tax of their own, and the exemption amounts aren’t typically as generous as the federal estate tax exemption. For example, in Massachusetts, the state estate tax exemption is only $2 million.
To make matters worse, a handful of states also impose an inheritance tax, which can leave heirs with a tax bill on even small amounts of money. For example, Nebraska imposes an inheritance tax on adult children when their inheritances exceed $100,000. And in Kentucky, nieces and nephews only receive a $1,000 exemption.
Related Content
-
USPS Is Raising Prices for Holiday Shipping: Dates and Increases You Need to KnowWhat the USPS's $16 price hike means for your wallet and your small business.
-
July CPI Report Ignites a Risk-On Rally: Stock Market TodayMarket participants price out worst-case scenarios for tariffs and inflation and will now turn their attention to employment and growth.
-
How Your 2025 Summer Wedding Could Save You Money on TaxesTax Breaks There are some wedding expenses that are tax-deductible, and you don’t want to miss out on savings.
-
Retirees Should Watch These Four Key Tax Changes in 2025Tax Changes This year brings key tax changes that could affect your retirement taxes and income.
-
Tariff Stimulus Checks Coming? New Proposal Seeks Tax Rebates for US WorkersTax Breaks A new GOP bill proposes to send $600 in tariff rebate checks to eligible taxpayers. Is there a catch?
-
Biggest Winners and Losers in Trump's New Tax PlanTax Law Trump’s mega tax overhaul, known as the ‘One Big Beautiful Bill,’ has distinct winners and losers. Which group do you fall into?
-
Five Ways Trump’s 2025 Tax Bill Could Boost Your Tax Refund (or Shrink It)Tax Refunds The tax code is changing again, and if you’re filing for 2025, Trump’s ‘big beautiful’ bill could mean a bigger refund, a smaller one or something in between next year. Here are five ways the new law could impact your bottom line.
-
New SALT Deduction Could Put Thousands Back in California Homeowners’ PocketsTax Breaks The federal state and local sales tax (SALT) deduction cap is higher this year, and could translate into bigger savings for Golden State homeowners.
-
Money for Your Kids? Three Ways Trump's ‘Big Beautiful Bill’ Impacts Your Child's FinancesTax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.
-
New Cap on Gambling Loss Deductions Begins Soon: What to Know NowTax Changes A gambling losses tax deduction cap in Trump’s “big beautiful bill” is causing an uproar. Here’s what you need to know.
