Estate Tax: The Marital Deduction and Lifetime Exemption Are the Key Levers
The federal estate tax isn't applied to your entire estate at face value; it's applied only after two major exemptions are subtracted. The first is the unlimited marital deduction: anything you leave to a surviving spouse who is a U.S. citizen passes completely free of estate tax, no matter how large the amount. The second is the lifetime exemption, $13.99 million per person in 2025, which shelters whatever passes to children or other heirs, and which also covers any taxable gifts made during your lifetime. Because the two work together, a married couple can often shelter a very large combined estate: assets left to the surviving spouse avoid tax entirely, and the remainder can still use the deceased spouse's own lifetime exemption (and, with a portability election, any unused portion of it can even carry over to the surviving spouse). This calculator estimates your taxable estate after both exemptions and applies the top 40% federal estate tax rate, which is effectively what applies to any amount above the exemption once an estate is large enough to be taxable at all. Because the exemption amount is indexed for inflation and can change with future legislation, and because portability and gifting strategies can meaningfully shift the numbers, this is best used as a starting point before talking with an estate planning attorney or tax professional.
Federal Estate Tax Basics (2025)
| Item | Amount |
|---|---|
| Lifetime Exemption (per person) | $13,990,000 |
| Marital Deduction (U.S. citizen spouse) | Unlimited |
| Top Federal Estate Tax Rate | 40% |
Frequently Asked Questions
Yes, assets to a U.S. citizen spouse pass tax-free under the marital deduction, and the lifetime exemption then shelters what passes to children.
No, it's unlimited for a U.S. citizen surviving spouse. A reduced version applies if the spouse isn't a U.S. citizen.
Not directly. The lifetime exemption is shared across the whole estate rather than granted per child.
※ This applies a simplified flat 40% rate above the exemption and doesn't account for portability, state estate taxes, or prior taxable gifts; consult a tax professional for exact figures.