What Is the Estate Tax?

The federal estate tax applies to the transfer of a deceased person's assets to heirs — but only on estates above the exemption amount ($13.61 million per person in 2024). Fewer than 0.2% of estates owe federal estate tax. The tax rate on amounts above the exemption can reach 40%. Assets passing to a surviving spouse are generally exempt (the "unlimited marital deduction"). The current high exemption is scheduled to drop roughly in half after 2025 unless Congress acts — making estate planning more important for larger estates.