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 when you die. If your estate is smaller than this number, no federal estate tax is due, regardless of who inherits your money or property.

The exemption applies to the total value of everything you own — your house, bank accounts, investments, vehicles, life insurance proceeds, and other assets. Your executor adds up the fair market value of all these items. If the total falls below $13.61 million, your estate owes nothing to the federal government.

This exemption amount changes every year. The IRS adjusts it for inflation, so the number you see in 2024 will be different in 2025. The adjustment is automatic and announced in October of the prior year.

Key Takeaways

  • The 2024 exemption of $13.61 million is per person, so a married couple can shelter $27.22 million combined if they plan correctly.
  • This exemption is temporary and scheduled to drop to roughly $7 million per person (adjusted for inflation) on January 1, 2026, unless Congress changes the law.
  • The exemption applies only to federal estate tax; your state may have its own estate or inheritance tax with a lower or no exemption.
  • Using your exemption during your lifetime through gifts does not increase the amount you can leave tax-free at death — it reduces it dollar for dollar.

Why the Exemption Is Temporary

The current $13.61 million exemption exists because of the Tax Cuts and Jobs Act passed in 2017. That law doubled the exemption from roughly $5.5 million and set it to expire on December 31, 2025. On January 1, 2026, the exemption is scheduled to drop back to approximately $7 million per person (adjusted for inflation), unless Congress passes new legislation to extend or change it.

This sunset date matters if your estate is close to the current exemption. An estate worth $10 million faces no federal tax under 2024 rules, but would owe tax on roughly $3 million of that value starting in 2026. Many people with estates in this range are working with attorneys now to plan for the change.

How the Exemption Works for Married Couples

Married couples can combine their exemptions through a process called portability. If one spouse dies and uses only part of their $13.61 million exemption, the surviving spouse can use the unused portion. This means a married couple can shelter up to $27.22 million combined in 2024.

Portability is not automatic. Your executor must file a federal estate tax return (Form 706) within nine months of death, even if no tax is owed, to preserve the unused exemption for the surviving spouse. If you skip this step, the unused exemption is lost forever. This is one reason to work with an estate attorney or tax professional when someone dies.

State Estate and Inheritance Taxes

Seventeen states plus Washington, D.C., have their own estate or inheritance taxes. These are separate from the federal exemption and often have much lower thresholds. For example, Massachusetts has a state estate tax exemption of $1 million, and New York's is $6.94 million in 2024. If you live in or own property in one of these states, your estate may owe state tax even if it owes nothing to the federal government.

The states with estate taxes are Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Washington, and the District of Columbia. If you live in or own real estate in any of these places, check your state's current exemption amount, as it may be lower than the federal one.

Gifts During Your Lifetime and the Exemption

You can give money or property to anyone during your lifetime without owing gift tax, up to an annual limit. In 2024, you can give up to $18,000 per person per year without reporting it to the IRS. Gifts above that amount count against your lifetime exemption.

This is important: your lifetime exemption and your estate tax exemption are the same pool of money. If you give away $1 million during your lifetime, your exemption at death drops from $13.61 million to $12.61 million. You do not get both — you share one exemption between lifetime gifts and what you leave at death. Married couples each have their own $13.61 million pool.

What Happens If Your Estate Exceeds the Exemption

If your estate is larger than $13.61 million in 2024, the amount above the exemption is taxed at a flat rate of 40 percent. An estate worth $15 million would owe federal tax on $1.39 million, which equals roughly $556,000 in federal estate tax. This is why people with large estates often use trusts, life insurance, or other strategies to reduce the taxable amount.

The 40 percent rate applies to the entire excess amount, not just a portion of it. This is why the exemption matters so much — every dollar you can shelter from tax saves 40 cents in federal tax. After 2025, when the exemption drops, more estates will owe tax unless Congress acts.

Planning Before the Exemption Changes

If your estate is between $7 million and $13.61 million, you have until the end of 2025 to use the higher exemption. Some people make large gifts to family members or charities during this window to lock in the current exemption amount. Others set up trusts or other structures to take advantage of the higher exemption while it lasts.

This is not a decision to make alone. An estate attorney or tax professional can review your specific situation and explain which strategies make sense for you. The cost of a consultation is usually far less than the tax savings from planning correctly.

Frequently Asked Questions

Does the $13.61 million exemption explore to state taxes too?

No. The federal exemption and state exemptions are separate. Your estate may owe no federal tax but still owe state estate or inheritance tax if you live in or own property in a state that has one. Check your state's rules, as many have much lower exemptions than the federal amount.

If I'm married, can my spouse use my unused exemption after I die?

Yes, through portability, but only if your executor files a federal estate tax return (Form 706) within nine months of your death. Without that filing, the unused exemption is lost. This is why it matters to work with an attorney or tax professional when someone dies, even if no tax is owed.

What happens to the exemption on January 1, 2026?

The exemption is scheduled to drop to roughly $7 million per person (adjusted for inflation) unless Congress extends the current law. This is not automatic — it is a scheduled change. If you have a large estate, talk to an attorney about planning before the end of 2025.

Do gifts I make now count against my exemption at death?

Yes. Your lifetime exemption and your estate tax exemption are the same $13.61 million pool. Gifts above the annual limit of $18,000 per person per year reduce the amount you can leave tax-free at death, dollar for dollar.

What if my estate is worth less than the exemption?

If your estate is smaller than $13.61 million in 2024, no federal estate tax is owed. Your heirs receive everything without a federal tax bill. Your executor may still need to file a return for other reasons, so check with a tax professional about your specific situation.