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Key Facts
- Federal level: Federal estate tax is imposed on the transfer of a taxable estate, rather than directly on each beneficiary’s inheritance.
- Federal level: For a U.S. citizen or resident who dies in 2026, the basic exclusion amount and Form 706 filing threshold are generally $15 million.
- Federal level: The filing test includes the gross estate, adjusted taxable gifts, and any specific gift-tax exemption, so it is not based only on property passing through probate.
- Federal level: Form 706 is generally due nine months after death, and Form 4768 can provide an automatic six-month extension to file.
- Federal level: An estate may file Form 706 below the ordinary threshold to elect portability of a deceased spouse’s unused exclusion for a surviving spouse.
Federal estate tax is a transfer tax measured at death. It applies to the taxable estate as a whole, not as a separate federal inheritance tax charged to each person who receives property. The calculation begins with a broad gross estate, subtracts permitted deductions, accounts for certain lifetime gifts, and then applies the federal credit and rate structure.
The 2026 federal estate tax threshold
For a U.S. citizen or resident who dies in 2026, the basic exclusion amount is $15 million. The estate generally has a Form 706 filing obligation when the gross estate plus adjusted taxable gifts and any specific gift-tax exemption exceeds that amount.
The $15 million figure is not a simple probate-asset exemption. Property can be included in the federal gross estate even when it transfers outside a will or probate case, and lifetime taxable gifts can affect the filing test and tax computation.
The year of death controls the applicable exclusion. Earlier years had different amounts, so an article describing a 2021 or 2025 estate tax threshold does not establish the threshold for a death in 2026.
What belongs in the gross estate
The gross estate generally includes property in which the decedent held an interest at death, valued at fair market value rather than historical purchase price. It can include real estate, securities, cash, business interests, digital assets, certain annuities, and the includible share of jointly owned property.
Certain life-insurance proceeds can be included even when paid directly to a beneficiary. The same is true of property subject to a general power of appointment and some transfers made during life in which the decedent retained specified rights or control.
Gross-estate inclusion is distinct from probate administration. A nonprobate transfer may still enter the federal estate tax calculation, while ownership rules and the Internal Revenue Code determine the includible amount.
From gross estate to taxable estate
The taxable estate is not simply the total value of everything owned. Federal law permits deductions that can include qualifying funeral and administration expenses, enforceable debts, charitable transfers, and property passing to a surviving spouse under the marital-deduction rules.
The marital deduction is generally unlimited for qualifying transfers to a surviving spouse who is a U.S. citizen. Transfers to a noncitizen surviving spouse can require a qualified domestic trust or another applicable rule to receive comparable treatment.
After deductions, the computation integrates adjusted taxable gifts made after 1976. This unified estate-and-gift-tax structure helps explain why taxable gifts made during life can use part of the exclusion otherwise available at death.
Form 706 and the executor’s role
The executor of an estate uses Form 706 to calculate the federal estate tax imposed by Chapter 11 of the Internal Revenue Code. The return also calculates generation-skipping transfer tax on certain direct skips involving property included in the gross estate.
Form 706 is generally due nine months after the date of death. Form 4768 can provide an automatic six-month extension to file, but an extension to file does not automatically extend the time to pay tax.
The schedules organize different asset and deduction categories. For example, Schedule A reports real estate, Schedule B reports stocks and bonds, and Schedule C reports mortgages, notes, and cash.
Portability can make a below-threshold return important
Portability allows a surviving spouse to receive a deceased spouse’s unused exclusion amount, known as DSUE. The deceased spouse’s estate makes the election on a complete and timely Form 706, even if the estate was otherwise below the normal filing threshold.
The surviving spouse generally may apply the portable amount from the last deceased spouse to later taxable gifts or transfers at death. Portability does not transfer the deceased spouse’s generation-skipping transfer tax exemption.
A simplified late-election procedure may be available to certain estates that were not otherwise required to file. Under the current revenue procedure, a qualifying portability return may be filed on or before the fifth anniversary of death.
Estate tax and inheritance tax are not the same
The federal estate tax is imposed on the taxable estate’s transfer. An inheritance tax, where state law imposes one, is generally framed around what a beneficiary receives and may depend on the beneficiary’s relationship to the decedent.
There is no separate federal inheritance tax merely because someone receives a bequest. State law is a separate layer, so the federal $15 million amount does not establish a state’s result.
Citizenship and residence change the framework
The ordinary Form 706 rules described here concern estates of U.S. citizens and residents. For federal estate tax purposes, residence is based on domicile, which considers living in a place together with an intention about remaining there.
An estate of a nonresident who was not a U.S. citizen generally uses Form 706-NA and focuses on U.S.-situated property. The filing threshold can be $60,000 before treaty and other adjustments, making the ordinary $15 million citizen-and-resident threshold an unsafe comparison for that separate category.
Sources
- 26 U.S.C. § 2001: imposition and computation of estate tax
- IRS overview of federal estate tax
- IRS frequently asked questions on estate tax
- IRS current estate and gift tax exclusion amounts
- IRS Instructions for Form 706
- IRS official Form 706 page and schedules
- IRS estate tax rules for nonresident noncitizens
