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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
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.
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
-
What to Do About These Three Medicare Changes During Open EnrollmentWith costs due to rise sharply next year, look for coverage that protects your wallet as well as your health.
-
Use the 'Newton Rule' to Grow Your 401(k) Retirement SavingsHarnessing Sir Isaac Newton's rule of retirement can boost your 401(k) savings while you chill.
-
Five Retirement Planning Traps You Can't Afford to Fall Into, From a Wealth AdviserTo help ensure you reach your savings goals and enjoy financial security in your golden years, be aware of these common pitfalls. The key is to be proactive, informed and flexible.
-
Your 401(k) Can Now Include Alternative Assets, But Should It? A Financial Adviser Weighs InMany employer-sponsored plans offer limited investment options, which can stunt growth. But participants considering alternatives might need some sound advice to get the most from their accounts.
-
Will Taxes Shred Your 401(k) or IRA During Your Retirement? It's Very LikelyConventional wisdom dictates that you save in a 401(k) now and pay taxes later, but turning that rule on its head could leave you far better off. A financial planner explains why.
-
More Retirees Are Renting: Should You? A Financial Adviser Weighs InIn some ways, renting is cheaper, more flexible and easier, but unless you understand the implications for your taxes and health costs, it might not be for you.
-
I'm a Real Estate Investing Pro: This 1031 Exchange Strategy Can Triple Your Cash FlowSavvy investors can use 1031 exchanges to unlock value by moving capital across markets in a play called geographic arbitrage. These tax implications can make or break the strategy.
-
Standard Deduction 2026 Amounts Are HereTax Breaks What is the standard deduction for your filing status in 2026?
-
Claiming the Standard Deduction? Here Are Five Tax Breaks for Retirement in 2025Tax Tips If you’re retired and filing taxes, these five tax credits and deductions could provide thousands in relief (if you qualify).
-
Where There's a Will, There's a Way Your Assets Will Be Distributed as You WishYour will is the backbone of a strong, adaptable estate plan that ensures what you leave behind goes to your selected beneficiaries. Without a will, state laws determine who gets your assets.
