Who has to pay the estate tax?

Miniature wooden house sitting next to a stack of coins and wooden blocks that say "Tax"

(Image credit: Thana Prasongsin / Getty Images)

published 1 July 2025

The estate tax only applies in select circumstances. But when it does, this tax on the value of a deceased person's estate can result in a sizable bill.

If President Trump's tax-and-spending bill is passed, however, those to whom the estate tax applies could get a permanent break. The new bill would permanently increase the estate tax exemptions that Trump passed in 2017, which were otherwise set to expire by the end of the year, shifting who would owe the federal estate tax.

What is the estate tax?

The estate tax is a tax on the "value of a person's assets at the time of their death, applied before anything is passed on to heirs," said Bankrate. It is not to be confused with the inheritance tax, which "beneficiaries pay on what they receive"; the estate tax, by contrast, is "settled by the estate itself, before assets are distributed to beneficiaries."

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There is a federal estate tax, which is what Trump's bill would address. Certain states also have an estate tax, which can apply in addition to the federal estate tax.

When do you have to pay estate tax?

Whether you have to pay the estate tax depends on the fair market value of an estate. Estates below a certain threshold are not subject to estate tax, while estates valued above that exemption amount are.

As of 2025, "all the assets of a deceased person that are worth $13.99 million or more in 2025 are subject to federal estate taxes," said Investopedia. If the Trump tax bill passes, that limit would increase, which would mean an "individual could die in 2026 with $15 million, and a married couple with $30 million, without owing estate tax," said The Wall Street Journal. But if the bill does not pass, the current exemption limit "would expire at year-end and drop by about half," to roughly $7.14 million, shifting estate planning logistics for many.

How much is the estate tax?

For tax year 2024, the federal estate tax "ranges from 18% to 40%, depending on how much the value of the estate exceeds the current exemption limit of $13.61 million," said CNBC Select.

The tax only applies to the amount over the exemption limit, and it is "progressive, meaning the rate increases with the estate's value," said Bankrate. So, for instance, an estate that exceeds the limit by any amount under $10,000 would pay a rate of 18%, while an estate that exceeds the exemption limit by more than $1 million would pay a rate of 40% on that excess. It is possible to reduce the amount you pay, though, through mechanisms like trusts and strategic gifting, which an expert like a financial adviser can offer guidance on.

For states with an estate tax, the rates vary depending on the specific laws there. However, "18% is the federally mandated maximum inheritance tax rate that can be charged by any state," said Investopedia.

Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She previously served as a deputy editor and later a managing editor overseeing investing and savings content at LendingTree and as an editor at the financial startup SmartAsset, where she focused on retirement- and financial-adviser-related content. Before that, Becca was a staff writer at The Week, primarily contributing to Speed Reads.