What's the Difference Between the Gross Estate and the Taxable Estate?

The gross estate and the taxable estate are two different figures used to determine whether estate taxes are owed when someone dies. The gross estate includes everything of value that the deceased owned or had an interest in at death — real estate, bank accounts, investments, life insurance proceeds, and retirement accounts. The taxable estate is the gross estate minus certain allowable deductions, most importantly the marital deduction (assets left to a surviving spouse pass estate-tax-free), debts and mortgages, funeral expenses, and charitable bequests. After these deductions, if the remaining taxable estate exceeds the federal exemption ($13.61 million in 2024), the excess is subject to estate tax at rates up to 40%. Very few estates ever owe federal estate tax because the exemption is so high.