The 2024 Estate Tax Exemption Amount

The federal estate tax exemption for 2024 is $13.61 million per person. This means you can leave up to that amount to your heirs without owing federal estate tax. If you are married and both spouses use their exemptions, you can pass $27.22 million combined without triggering federal estate tax.

This exemption applies only to federal estate tax. Your state may have its own estate tax or inheritance tax with a lower exemption — some states exempt only $1 million or less. The federal exemption is also temporary: it is scheduled to drop to approximately $7 million per person (adjusted for inflation) on January 1, 2026, unless Congress changes the law.

The exemption amount changes each year based on inflation. The IRS publishes the new figure in October or November for the following year. If you die in 2024, your estate uses the 2024 exemption of $13.61 million, regardless of when you made gifts or when your will was written.

Key Takeaways

  • You can leave $13.61 million to heirs in 2024 without paying federal estate tax, or $27.22 million if you are married and both spouses use their exemptions.
  • The exemption drops to roughly $7 million per person starting January 1, 2026, unless Congress extends the current law.
  • Your state may have its own estate or inheritance tax with a much lower exemption, even if you use your full federal exemption.
  • Gifts you make during your lifetime count against your exemption, so large gifts now reduce the amount you can pass tax-free at death.
  • The exemption amount is indexed to inflation each year and published by the IRS in the fall.

How Gifts During Your Lifetime Affect Your Exemption

Any gift you make during your lifetime uses up part of your exemption. If you give $500,000 to a child in 2024, you have $13.11 million of exemption left when you die. The gift and the estate are added together to determine whether you owe tax.

There is an annual exclusion that does not count against your exemption: you can give up to $18,000 per person per year (in 2024) without using any exemption. Married couples can give $36,000 per person per year. Gifts to spouses and to charities do not count against the exemption at all.

If you give more than the annual exclusion to one person in a single year, you must file Form 709 (the gift tax return) with the IRS, even if you do not owe tax. This form documents that you used part of your lifetime exemption. Many people file Form 709 even for gifts under the exemption straightforward to preserve the record.

What Happens If Your Estate Exceeds the Exemption

If your taxable estate is larger than $13.61 million, the amount over the exemption is taxed at a flat rate of 40 percent. An estate worth $15 million would owe tax on $1.39 million, which equals $556,000 in federal estate tax.

Your executor (the person managing your estate) is responsible for filing Form 706 (the estate tax return) if your estate exceeds the exemption. This return is due nine months after your death, though an extension can be requested. The executor must pay the tax from estate assets before distributing anything to heirs.

State estate taxes and inheritance taxes are separate from federal tax and are calculated differently. Some states tax the estate itself; others tax what each heir receives. A few states have no estate or inheritance tax at all. You need to check your state's rules, because owing state tax does not reduce what you owe in federal tax.

The 2026 Exemption Cliff and What It Means

The current high exemption is set to expire on December 31, 2025. Starting January 1, 2026, the exemption will drop to approximately $7 million per person (adjusted for inflation from 2009 levels). This is sometimes called the "exemption cliff" because the change is sudden and large.

Congress could extend the current exemption, lower it further, or change the rules entirely. No one knows what will happen until Congress acts. If you have an estate close to or above $7 million, you may want to discuss your situation with an estate planning attorney or tax professional now, rather than waiting to see what Congress does.

Some people use their full exemption before 2026 by making large gifts to heirs or to trusts. Others wait to see whether Congress extends the current exemption. There is no single right answer — it depends on your family situation, your estate size, and your comfort with uncertainty.

State Estate and Inheritance Taxes

Seventeen states and the District of Columbia have their own estate tax or inheritance tax. The exemptions vary widely. Washington state exempts $2.193 million per person in 2024. Massachusetts exempts $1 million. Some states exempt much less.

An inheritance tax is paid by the person who receives the money; an estate tax is paid by the estate itself. The practical effect is similar: money goes to the state instead of to heirs. A few states have both an estate tax and an inheritance tax.

If you live in a state with an estate tax, you may owe state tax even if your estate is below the federal exemption. If you own property in multiple states, you may owe tax in more than one state. This is another reason to review your situation with a professional if your estate is substantial.

How to Report Your Estate and Use Your Exemption

If your estate is below the exemption, your executor generally does not need to file Form 706 with the IRS. However, if you made large gifts during your lifetime and filed Form 709, your executor may need to file Form 706 anyway to document that you used part of your exemption.

If your estate exceeds the exemption, Form 706 must be filed within nine months of death. The form lists all assets, their values, any debts, and any gifts made during your lifetime. The executor calculates the taxable estate and the tax owed. An extension to file can be requested, but tax is still due nine months after death unless an extension is granted.

Your executor will need documents showing the value of everything in your estate: real estate appraisals, bank and brokerage statements, life insurance policies, retirement account beneficiary forms, and any trusts you created. Gathering these documents takes time, so it is helpful if you keep a list of your assets and where they are located.

Planning Strategies When Your Estate Is Large

If your estate is close to or above the exemption, common planning strategies include making gifts now to use your exemption while it is high, creating trusts that remove assets from your taxable estate, and making sure your beneficiary designations on retirement accounts and life insurance are current.

Married couples can use both spouses' exemptions through careful planning, often with the help of a will or trust that is written to take advantage of both. A surviving spouse can also use any unused exemption from the first spouse to die — this is called "portability" — but the executor must file Form 706 to elect it, even if the estate is below the exemption.

Charitable giving can also reduce your taxable estate. Donations to may have access to charities are not subject to estate tax, and you may receive an income tax deduction during your lifetime. Donor-advised funds and charitable trusts are tools that some people use to combine charitable intent with tax planning.

Frequently Asked Questions

Do I need to do anything now to use my 2024 exemption?

Not automatically. Your exemption is available when you die or when you make a gift. If you make a gift over the annual exclusion, you file Form 709 to document it. If you do nothing, your exemption is still there — your executor will use it when calculating your estate tax, if any is owed.

If I give away $13.61 million now, can I give away more later?

No. Your lifetime exemption is one pool. Once you use it, it is gone. If you give away $13.61 million in 2024, you have no exemption left for gifts or your estate. Any additional gifts or estate value above the annual exclusion would be subject to tax.

Does my spouse's unused exemption automatically transfer to me if they die?

Not automatically. Your executor must file Form 706 and elect "portability" to preserve your spouse's unused exemption. If Form 706 is not filed, the unused exemption is lost. This is true even if your spouse's estate is below the exemption and would not otherwise require a return.

What if I live in a state with an estate tax and also owe federal estate tax?

You owe both. Federal and state estate taxes are separate calculations. Some states allow a credit for federal tax paid, but this does not eliminate the state tax. You will need to file both a federal Form 706 and your state's estate tax return.

Will my exemption change if Congress acts before I die?

Yes. Your exemption is whatever the law is when you die, not when you made gifts or when your will was written. If Congress lowers the exemption to $7 million and you die after that change, your exemption is $7 million, even if you planned based on $13.61 million.