As of my last update in January 2022, the federal estate tax in the United States applies to estates with a total value exceeding a certain threshold. This threshold is known as the “federal estate tax exemption.” The exemption amount determines how much you can inherit without paying federal estate taxes.
For the tax year 2022, the federal estate tax exemption is $12.06 million per individual. This means that an individual can inherit up to $12.06 million in assets without owing federal estate taxes. For married couples, proper estate planning can potentially double this exemption through various mechanisms such as portability and trusts, effectively allowing a married couple to pass on up to $24.12 million without incurring federal estate taxes.
It’s important to note that state estate taxes may also apply, and the thresholds and rates can vary by state. Some states have their own estate tax exemptions, which may differ from the federal exemption.
Additionally, inheritance taxes, which are different from estate taxes, are imposed by a few states on the beneficiaries rather than the estate itself. The rules and exemptions for inheritance taxes also vary by state.
It’s advisable to consult with a qualified estate planning attorney or tax advisor to understand how federal and state estate tax laws may affect your specific situation and to explore strategies for minimizing potential tax liabilities.