The federal estate tax exemption increased again for 2025. Although the higher, IRS-inflation-adjusted number, announced last fall, may not have come as a surprise to most.
However, 2025 is a pivotal tax year.
After the Tax Cuts and Jobs Act (TCJA) temporarily raised the estate exemption amount to a higher base threshold, the so-called "One Big Beautiful Bill" (OBBB) enacted on July 4, 2025, makes that extension permanent.
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.
Under the new Trump tax megabill, estate exemption amounts increase to $15 million for single filers and $30 million for married filing joint couples.
A higher exemption in the current year will save more estates from federal tax, which may save heirs the heartache of a higher tax bill. Here's more of what you need to know.
Current estate tax exemption
The federal estate tax doesn’t apply unless you hit a certain exemption amount.
- The exemption amount for people who pass away in 2025 is $13.99 million (up from $13.6 million last year).
- Married couples can expect their exemption to be $27.98 million (up from $27.22 million last year).
Federal estate tax rate
Only a certain percentage of estates will be subject to the federal estate tax. This is because the exemption is high for 2025.
However, estates valued over the tax amount will be taxed at a pretty hefty rate, with those exceeding more than $1 million ($14,990,000 or $28,980,000 combined for married couples) taxed at 40%.
Below is how much heirs can expect to pay based on an estate’s value:
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 |
State estate taxes
Some states may impose an estate tax of their own (and the exemption amounts aren’t always as generous as the federal estate tax exemption).
For instance, in Massachusetts, the state estate tax exemption is just $2 million and isn’t indexed for inflation.
A few states also impose an inheritance tax, which can leave a tax bill for your heirs on even small amounts of money.
Nebraska, for example, imposes an inheritance tax on adult children when their inheritances exceed $100,000. In Kentucky, nephews and nieces only receive a $1,000 exemption.
Estate tax under the 'One Big Beautiful Bill'
The new so-called "One Big Beautiful Bill" (OBBB) makes the exemption permanent, and increases the amounts for 2026:
- Single filers will receive an estate exemption of $15 million
- Married filing joint couples will receive an exemption from estate taxes of $30 million.
The estate tax exemption is also indexed for inflation.
Period | Exemption Amount |
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 |
2025 | $13,990,000 |
GOP estate tax bill
With Trump serving his second term as president and tax reform passed through reconciliation, many provisions of the TCJA will continue for some time.
The tax bill extends many provisions in the TCJA (which includes the estate tax exemption previously mentioned).
Other TCJA tax provisions in the OBBB include:
- Extending the increased standard deduction and temporarily raising the amounts
- Permanently eliminating the personal and dependency exemption
- Extending and temporarily increasing the federal child tax credit
Read More
-
Stock Market Today: Stocks Slip Ahead of Big Earnings, Inflation WeekPerhaps uncertainty about tariffs, inflation, interest rates and economic growth can only be answered with earnings.
-
Ask the Editor — Tax Questions on "The One Big Beautiful Bill Act"Ask the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on the new tax law.
-
I'm a Financial Planner: Here Are Some Long-Term Care Insurance Tips for Every AgeStrategies include adding riders to life insurance for younger individuals and considering hybrid or traditional long-term care policies for those in their mid-50s and 60s.
-
Engineering Reliable Retirement Income in 2025: An Expert GuideFor dependable income, consider using a bucket strategy and annuities in tandem to promote structure, flexibility and peace of mind.
-
Crazy Markets Shouldn't Derail Your Retirement if You Follow This Financial Pro's PlanBeing nervous about retiring in a volatile market is a red flag that you're relying too heavily on your investment portfolio, rather than a comprehensive plan.
-
What to Know About New Medicaid Cuts: Is Your Local Hospital Closing Soon?Tax Policy Trump’s ‘One Big Beautiful Bill’ is now law, and rural hospitals across the U.S. are on the chopping block.
-
Key to Financial Peace of Mind: Think 'What's Next?' Rather Than 'What If?'Even if you've hit your magic number for retirement, it's hard to stop worrying about money. Giving it a clear purpose is one way to reduce financial anxiety.
-
Three Estate Planning Documents a Business Owner Can't Afford to SkipA business owner's estate plan should protect the company and its employees as well as the entrepreneur's heirs. These three documents are critical.
-
Financial Fact vs Fiction: Why Your 'Magic Number' Isn't Actually MagicalDo you think you're diversified if you're invested in the S&P 500 and Nasdaq? Do you think your tax rate will fall in retirement? Think again — and read on for other myths that could be leading you astray.
-
Opportunity Zones: An Expert Guide to the Changes in the One Big Beautiful BillThe law makes opportunity zones permanent, creates enhanced tax benefits for rural investments and opens up new strategies for investors to combine community development with significant tax advantages.
