The Federal government also charges a "death tax" to an estate that is over $13.61 million at the time of death (2024 rate). The top tax rate is at 40%. This means that if your gross estate at the time of death is over $13.61 million, you will pay a federal estate tax as outlined in the chart below.
Understand that this exemption amount will be cut in half on January 1, 2026, and adjusted for inflation. If you are facing estate tax liability, planning now is key to avoid taxation.
The tax must be paid first before heirs receive anything from the estate. There are always avenues to explore with estate planning tools to try and reduce this amount and avoid paying state estate taxes.
For married couples facing a federal taxable estate, you have the option of portability. This means that a married couple can have a gross estate of up to $27.22 million ($13.61 million each) without having to pay federal taxes. Let's say during their lifetime the married couple does not use up that entire amount and the first spouse dies. Upon the first spouse's death, any unused exemption amount can be "ported" by the other spouse to avoid paying taxes. The surviving spouse would have to make a portability election on IRS Form 706 to transfer that deceased spouse's unused exemption amount over to their estate. The time for a portability election period is now extended to on or before the fifth anniversary of the decedent's date of death. The surviving spouse carries over that ported amount and will bypass taxes at the first spouse's death.
**Please note portability does not exist for Illinois**
