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).
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free 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
-
What You Need to Do With Your 401(k) Before 2025 Is OverBefore 2025 ends, check your 401(k) contributions, investments, and catch-up eligibility to lock in this year’s tax savings and employer match.
-
3 Year-End Tax Moves You Can't Afford to MissDon't miss out on this prime time to maximize contributions to your retirement accounts, do Roth conversions and capture investment gains.
-
A Tax Diversification Strategy for Your Retirement IncomeSpreading savings across three "tax buckets" — pretax, Roth and taxable — can help give retirees the flexibility to control when and how much taxes they pay.
-
Tax Refund Alert: House GOP Predicts 'Average' $1,000 Payouts in 2026Tax Refunds Here's how the IRS tax refund outlook for 2026 is changing and what steps you can take now to prepare.
-
New IRS Changes to FSA Contribution Limits for 2026: What to KnowHealth Care Flexible Spending Accounts have tax advantages worth looking into, especially in light of new IRS changes.
-
Is a New $25,000 Health Care Tax Deduction Coming in 2026?Tax Policy A proposal from GOP Sen. Josh Hawley adds to the chatter about health care affordability.
-
3 Ways High-Income Earners Can Maximize Their Charitable Donations in 2025Tax Deductions New charitable giving tax rules will soon lower your deduction for donations to charity — here’s what you should do now.
-
An HSA Sounds Great for Taxes: Here’s Why It Might Not Be Right for YouHealth Savings Even with the promise of ‘triple tax benefits,’ a health savings account might not be the best health plan option for everyone.
-
10 Retirement Tax Plan Moves to Make Before December 31Retirement Taxes Proactively reviewing your health coverage, RMDs and IRAs can lower retirement taxes in 2025 and 2026. Here’s how.
-
The Original Property Tax Hack: Avoiding The ‘Window Tax’Property Taxes Here’s how homeowners can challenge their home assessment and potentially reduce their property taxes — with a little lesson from history.
-
Three Critical Tax Changes Could Boost Your Paycheck in 2026Tax Tips The IRS predicts these tax breaks may change take-home pay in 2026. Will you get over $1,000 in tax savings?
