Estate Tax

The estate tax is a type of transfer tax that is assessed on people’s wealth after death. The tax is assessed on a person’s “gross estate,” which is defined broadly as assets that the deceased owned or once owned and retained interest in or control over. It is currently assessed at a maximum rate of 40%. However, under current tax law, there are very large exemption amounts. As of 2020, the first $11.58 million in an estate are exempt, and that doubles for a married couple. So, all but the very wealthy are exempt from this tax.

When applicable, in a state must file an estate tax return (Form 706) or request for extension within nine months after death.

A small (and shrinking) number of states also assess their own estate or inheritance taxes.

The estate tax is closely tied with the gift tax, as the two combine to form a single “federal transfer tax” structure.