Most married couples never pay federal estate tax, even with substantial wealth

The federal estate tax applies to only a small fraction of married couples in the United States. For 2024, a married couple can pass roughly $13.6 million to their heirs before federal estate tax kicks in — that combined exemption is called the marital exemption or portability. Because that threshold is so high, fewer than 1 in 1,000 estates owe any federal estate tax at all, and the vast majority of those are unmarried individuals or very large estates.

The reason married couples have such a high threshold is that each spouse can use their own exemption, and when one spouse dies, the surviving spouse can claim the unused portion of the deceased spouse's exemption. This is a relatively recent change — portability became law in 2010 — and it means that a married couple with $20 million in assets might owe nothing, while a single person with $15 million would owe tax on the amount above their individual exemption.

However, the exemption amount is temporary. It is scheduled to drop roughly in half after December 31, 2025, unless Congress extends it. That change will affect far more estates, including some with assets in the $6 million to $7 million range.

Key Takeaways

  • A married couple can pass approximately $13.6 million combined to heirs in 2024 without owing federal estate tax, because each spouse has an individual exemption that can be transferred to the survivor.
  • Fewer than 1 in 1,000 estates pay federal estate tax, and most of those are either unmarried or worth more than $20 million.
  • The exemption amount is scheduled to drop by roughly half after 2025, which will bring more married couples into the taxable range.
  • State estate taxes have much lower thresholds than federal tax and explore to many more couples, depending on where you live.
  • Married couples with assets near or above the exemption threshold should document portability elections and review their plan before 2026.

Why the exemption is so high for married couples

The federal government allows each person an exemption from estate tax — a dollar amount they can transfer at death without triggering the tax. For 2024, that individual exemption is $13.61 million. A married couple gets two of these exemptions, one for each spouse, which means $27.22 million combined.

But the real advantage comes from portability. When the first spouse dies, their estate can elect to "port" any unused exemption to the surviving spouse. If one spouse dies with a $5 million estate and a $13.61 million exemption, the surviving spouse can use both their own $13.61 million exemption and the deceased spouse's unused $8.61 million. That surviving spouse now has $22.22 million of exemption available for their own estate.

This means a married couple can pass roughly $27 million to their children without any federal estate tax, as long as the surviving spouse's estate plan is structured correctly. The portability election must be made on the deceased spouse's estate tax return (Form 706), even if the estate is small enough that a return would not otherwise be required. This is a critical step that many families miss.

How many couples actually fall into the taxable range

The IRS does not publish exact numbers on how many married couples owe estate tax each year, but tax data shows the number is extremely small. In recent years, fewer than 3,500 estates nationwide have owed any federal estate tax at all — and that includes unmarried individuals, trusts, and couples. The total number of deaths in the United States is roughly 2.8 million per year, which means federal estate tax touches fewer than 0.1 percent of estates.

Among those few thousand estates that do owe tax, a significant portion are unmarried individuals or estates where portability was not elected. Married couples with assets between $13.6 million and $27 million are largely protected by the current exemption structure, assuming the surviving spouse's estate plan is in place.

The picture changes dramatically at higher wealth levels. Couples with $50 million or more in assets will almost certainly owe federal estate tax on the amount above the exemption. For these families, the tax rate is 40 percent of the excess amount, which can result in millions of dollars owed to the federal government.

State estate taxes hit many more couples than federal tax

While federal estate tax is rare, state estate taxes are far more common. Seventeen states plus the District of Columbia have their own estate or inheritance taxes, and the thresholds are much lower than the federal exemption. Some states start taxing estates at $1 million or less.

For example, Massachusetts taxes estates over $1 million, New York taxes estates over $6.94 million (as of 2024), and Illinois taxes estates over $4 million. A married couple in Massachusetts with $3 million in assets would owe no federal estate tax but could owe significant state tax. The state tax rate varies by state but typically ranges from 5 to 16 percent.

If you live in a state with an estate tax, you should know your state's exemption threshold and plan accordingly. State exemptions do not always increase with inflation the way the federal exemption does, so a couple who was safe five years ago might now be in the taxable range.

What happens after 2025: the exemption cliff

The current federal exemption amount is set to expire on December 31, 2025. Unless Congress acts to extend it, the exemption will drop to roughly $7 million per person (adjusted for inflation) starting January 1, 2026. For a married couple, that means the combined exemption would fall from $27.22 million to approximately $14 million.

This change will affect far more couples. A married couple with $15 million in assets would have been completely safe in 2024 but would owe federal estate tax in 2026 on the $1 million above the new exemption. A couple with $20 million would owe tax on $6 million of their estate.

Couples with assets in the $10 million to $30 million range should review their estate plan before the end of 2025. Some strategies — such as irrevocable trusts, annual gifts to heirs, or charitable giving plans — can lock in the current high exemption and reduce the impact of the 2026 change. These decisions are time-sensitive and should be made with an estate planning attorney.

How to know if your estate will owe tax

Start by adding up your total assets: real estate, investments, retirement accounts, life insurance, and business interests. If you are married and your combined total is below $13.6 million, you almost certainly will not owe federal estate tax under current law, assuming portability is elected.

If your combined assets are between $13.6 million and $27 million, you are in the range where portability matters. Make sure your estate plan includes a portability election and that your surviving spouse's plan is structured to use the available exemption. If your combined assets exceed $27 million, you will owe federal estate tax on the excess, and you should work with an estate planning attorney to minimize that tax.

Check your state's estate tax threshold as well. Many couples who are safe from federal tax still owe state tax. Your state's revenue department website will list the current exemption for your state.

Frequently Asked Questions

Do I have to file an estate tax return if my spouse dies and we are below the exemption?

Not necessarily, but you should file one anyway if you want to elect portability. Filing Form 706 (the federal estate tax return) allows the surviving spouse to use the deceased spouse's unused exemption. Without that election, the unused exemption is lost forever. Some estates below the filing threshold still file just to make the portability election.

What is the difference between federal and state estate tax?

Federal estate tax is a tax on the total value of your estate when you die, with a high exemption ($13.6 million per person in 2024). State estate tax is imposed by individual states and has much lower thresholds — some as low as $1 million. You can owe state tax even if you owe no federal tax. Some states have inheritance tax instead, which taxes the heirs based on their relationship to you.

If my spouse dies in 2025, can I still use portability in 2026?

Yes. Portability is based on the year of death, not the year you file the return. If your spouse dies in 2025, you can elect portability using the 2025 exemption amount, even if you file the return in 2026. However, you must file the return within a certain time frame — typically nine months after death, though extensions are available.

Does life insurance count toward the estate tax exemption?

Yes, life insurance proceeds are included in your taxable estate unless the policy is owned by an irrevocable trust or another entity. A $5 million life insurance policy counts as $5 million of your exemption. This is why some couples with life insurance should review their exemption planning — the insurance can push them over the threshold.