The 2024 federal estate tax exemption is $13.61 million per person

For 2024, you can transfer up to $13.61 million to heirs during your lifetime or after death without owing federal estate tax. This number is adjusted each year for inflation. If your estate is smaller than this amount, federal estate tax does not apply to it at all — your heirs receive everything.

The exemption applies separately to each person. A married couple can combine their exemptions to shield up to $27.22 million. The exemption is not automatic; your estate simply does not owe tax if it falls below the threshold. If your estate exceeds it, only the amount over $13.61 million is taxed, at a rate of 40 percent.

This exemption is temporary. It is scheduled to drop to roughly $7 million per person (adjusted for inflation) on January 1, 2026, unless Congress changes the law. Many people with estates between $7 million and $13.61 million are making decisions now based on this sunset date.

Key Takeaways

  • The 2024 exemption of $13.61 million means estates smaller than this amount owe no federal estate tax, regardless of who inherits.
  • Married couples can combine exemptions to shield $27.22 million total, but only if both spouses' estates are structured to use both exemptions.
  • The exemption drops to approximately $7 million per person on January 1, 2026, unless Congress extends the current law.
  • Estate tax applies only to the amount over the exemption threshold, taxed at 40 percent, so most estates never owe it.
  • The exemption covers transfers during your lifetime and after death, but lifetime gifts use the same exemption pool as bequests.

How the exemption works with lifetime gifts and inheritances

The $13.61 million exemption covers both money and property you give away while alive and assets you leave in your will. These are not separate pools — they share one exemption. If you give $5 million to your children during your lifetime, you have $8.61 million left to pass on tax-free at death.

Gifts that use the exemption must be reported to the IRS on Form 709 (the gift tax return), even though no tax is owed. This creates a record that reduces your remaining exemption. Gifts that do not use the exemption — such as annual gifts under $18,000 per recipient in 2024 — do not need to be reported and do not reduce your exemption.

Your spouse can also give $18,000 per recipient per year without using either person's exemption. A married couple can therefore give $36,000 per year to each child, grandchild, or other person without any tax or reporting.

What happens to the exemption after 2025

On January 1, 2026, the exemption is scheduled to fall to approximately $7 million per person (adjusted for inflation from a 2010 baseline). This is sometimes called the "sunset" of the 2017 tax law. Congress would need to pass new legislation to prevent this drop or to extend the current $13.61 million level.

Because the change is scheduled, some people with estates between $7 million and $13.61 million are using their exemption now through lifetime gifts. The strategy is to lock in the higher exemption before it shrinks. This requires careful planning with a tax professional or estate attorney, because once you use the exemption, you cannot get it back if the law changes.

Others are waiting to see whether Congress acts. There is no penalty for waiting — if you do nothing and the exemption drops, your estate simply owes tax on the amount over the new threshold. The risk of waiting is that you lose the opportunity to use the higher exemption if Congress does not extend it.

State estate taxes and the federal exemption

The federal exemption does not protect you from state estate taxes. Seventeen states and Washington, D.C., have their own estate or inheritance taxes, with exemptions ranging from $1 million to $6.94 million. Even if your estate is under the federal exemption, you may owe state tax.

New York, for example, has a $6.94 million exemption. An estate worth $10 million would owe no federal tax but would owe New York state tax on the $3.06 million over the state threshold. Massachusetts, Connecticut, and Illinois have lower exemptions, so estates in those states face state tax sooner.

If you own property in multiple states or have moved recently, check the exemption rules in each state where you own real estate or where you are considered a resident. State rules can differ significantly from federal rules.

How exemption changes affect different estate sizes

If your estate is under $7 million, the 2026 change will not affect you. Your heirs will owe no federal estate tax regardless of when you die or what Congress does.

If your estate is between $7 million and $13.61 million, the 2026 change matters. You currently have room to pass on your full estate tax-free. After 2025, only the first $7 million (adjusted for inflation) would be exempt, and the rest would be taxed at 40 percent. Some people in this range are working with estate attorneys now to use the higher exemption through lifetime gifts or other strategies.

If your estate exceeds $13.61 million, you will owe federal estate tax on the excess no matter what happens in 2026. The exemption drop will increase your tax bill, but you are already subject to estate tax under current law. Planning with a tax professional is important to minimize what your heirs owe.

Documents and records you need for estate planning

If you are considering using your exemption or planning your estate, gather your financial records: bank and investment account statements, property deeds, life insurance policies, and retirement account beneficiary designations. These show your total estate value and help you and your advisor determine whether the exemption matters to you.

You will also need to know who owns what. Assets held in joint names, assets with named beneficiaries (like life insurance or retirement accounts), and assets in trusts pass outside your will and may not be subject to probate — but they still count toward your estate for tax purposes.

If you are married, you need to know how your spouse's assets are titled and what your spouse's will or trust says. The exemption is per person, so coordinating between spouses ensures both exemptions are used if that is your goal.

Frequently Asked Questions

Do I owe estate tax if my estate is exactly $13.61 million?

No. The exemption means you can pass on up to $13.61 million tax-free. Only the amount over $13.61 million is taxed. An estate of exactly $13.61 million owes zero federal estate tax.

If I give away $5 million now, can I give away another $13.61 million when I die?

No. The exemption is one pool. If you use $5 million during your lifetime, you have $8.61 million left for your will and any other transfers at death. Gifts reported on Form 709 reduce your remaining exemption dollar-for-dollar.

Does my spouse's exemption help my estate if I do not use mine?

Only if your estate is structured to allow it. If you die first and leave everything to your spouse, your exemption is wasted. You need a trust or other arrangement that lets your spouse's exemption apply to your assets. This is called "portability" planning and requires coordination between spouses.

What if Congress extends the exemption past 2025?

If Congress passes a law extending the $13.61 million exemption, the higher amount continues. If you used your exemption through lifetime gifts before the extension, you cannot reclaim it. This is a risk of using the exemption early — you lock in the decision.

Do I need to file a tax return if my estate is under the exemption?

Not for federal estate tax purposes. However, your estate may need to file an income tax return if it earned income during the year it was being settled. State rules vary. An estate attorney or tax professional can tell you what filings are required in your state.