There is no federal inheritance tax rate, because the federal government does not impose an inheritance tax. What it taxes is the estate itself, before anything reaches the heirs. For deaths in 2026, the federal estate tax runs on a graduated schedule from 18% to 40%, and it only applies to the portion of an estate that exceeds the $15 million basic exclusion amount. Beneficiaries do not personally owe federal tax on what they inherit.
Why “Inheritance Tax” Is the Wrong Federal Term
An inheritance tax and an estate tax are two different things, and the distinction changes who pays. An inheritance tax is charged to each beneficiary based on what they receive. An estate tax is charged to the estate as a whole, before distribution. The federal system uses only the second model.1Internal Revenue Service. Estate Tax
That means by the time assets reach an heir’s hands, any federal tax on the transfer has already been paid by the executor out of estate funds. If you are receiving an inheritance, you are not going to get a federal tax bill for it. If you are administering an estate large enough to owe tax, the estate pays before distributions go out.
The Federal Estate Tax Rate Schedule
The federal estate tax uses a graduated rate structure. It starts at 18% on the first $10,000 of taxable value and climbs to a 40% top marginal rate on amounts above $1 million.2Office of the Law Revision Counsel. 26 U.S. Code 2001 – Imposition and Rate of Tax The full bracket table:
- $0 to $10,000: 18%
- $10,001 to $20,000: 20%
- $20,001 to $40,000: 22%
- $40,001 to $60,000: 24%
- $60,001 to $80,000: 26%
- $80,001 to $100,000: 28%
- $100,001 to $150,000: 30%
- $150,001 to $250,000: 32%
- $250,001 to $500,000: 34%
- $500,001 to $750,000: 37%
- $750,001 to $1,000,000: 39%
- Over $1,000,000: 40%
These brackets apply to the taxable estate, not the total value of everything the decedent owned. The taxable estate is the gross estate minus allowable deductions, and it is reduced further by the unified credit that shelters the first $15 million. Because of how the credit works, the lower brackets almost never come into play. Any estate that actually owes tax is paying essentially 40% on the amount above the exemption.
The $15 Million Exemption for 2026
The basic exclusion amount for 2026 is $15 million per person. The One, Big, Beautiful Bill Act (Public Law 119-21), signed on July 4, 2025, amended the unified credit statute to lock in that figure.3Internal Revenue Service. What’s New – Estate and Gift Tax Beginning in 2027, the $15 million base will be adjusted upward for inflation.4Office of the Law Revision Counsel. 26 U.S. Code 2010 – Unified Credit Against Estate Tax
For a single decedent in 2026, the first $15 million passes tax-free. An estate worth $16 million owes tax on $1 million. An estate worth $14 million owes nothing. Most estates fall below the threshold entirely, so the effective federal estate tax rate for most families is zero.
The same $15 million ceiling covers lifetime gifts and transfers at death combined. Give away $5 million above the annual exclusion during your lifetime, and your remaining estate exemption drops to $10 million.2Office of the Law Revision Counsel. 26 U.S. Code 2001 – Imposition and Rate of Tax The annual gift tax exclusion, which sits outside the lifetime figure, is $19,000 per recipient for 2026.3Internal Revenue Service. What’s New – Estate and Gift Tax
Portability Doubles the Shield for Married Couples
Married couples can effectively protect up to $30 million by combining their exemptions. When the first spouse dies, any unused portion of that spouse’s $15 million exemption can transfer to the survivor. The transferred amount is called the deceased spousal unused exclusion, or DSUE, and it requires the executor to file Form 706 and make the election, even when no tax is owed.5Internal Revenue Service. Instructions for Form 706
The election has to be made on a timely filed Form 706, which means within nine months of death, or 15 months with an extension. Executors who were not otherwise required to file a return may still elect portability up to five years after the date of death under a special IRS revenue procedure.5Internal Revenue Service. Instructions for Form 706 Missing that window permanently forfeits the unused exemption.
A Much Smaller Exemption for Non-Residents
The $15 million figure only applies to U.S. citizens and residents. A decedent who was neither a citizen nor a resident gets a $60,000 exemption on U.S.-located assets, not adjusted for inflation, and the 40% top rate still applies. Estate tax treaties with roughly 15 countries can raise the available exemption for residents of those treaty partners, sometimes up to the full U.S. amount.
State Inheritance and Estate Taxes
The federal answer is not the whole answer, because state law can produce a tax that the federal system does not. Five states impose a true inheritance tax on the beneficiary: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Rates depend on the beneficiary’s relationship to the decedent. Spouses and children generally pay lower rates or nothing at all; distant relatives and unrelated beneficiaries pay more. Across the five states, rates range from about 1% to 16%.
Separately, 12 states and the District of Columbia impose their own estate taxes, some at thresholds far below the federal $15 million. Maryland is the only jurisdiction with both an estate tax and an inheritance tax. Residency matters on both sides of the transfer: some states tax their residents on worldwide assets, while others tax non-residents only on property physically located within the state. If either you or the decedent has ties to one of these states, the state rules can produce a bill even when the federal exemption fully shelters the estate.
What Beneficiaries Actually Pay
For inherited assets, federal law usually helps the beneficiary rather than taxing them. Property inherited from a decedent takes a new tax basis equal to its fair market value on the date of death.6Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent If a parent bought stock for $50,000 and it was worth $500,000 on the date they died, the beneficiary’s basis becomes $500,000. Selling at $500,000 produces no capital gains tax.
This step-up applies to real estate, stocks, business interests, and most other appreciated assets. It does not apply to retirement accounts. Distributions from an inherited 401(k) or IRA are taxed as ordinary income to the beneficiary, the same way they would have been taxed to the decedent.7Internal Revenue Service. Gifts and Inheritances If the executor filed Form 706, the basis a beneficiary reports must match the value reported on the estate tax return; inflating the basis can trigger an accuracy-related penalty.
So the practical picture at the federal level: no inheritance tax on the person receiving assets, an estate tax that only reaches estates above $15 million in 2026 and taxes the top slice at 40%, and a step-up in basis that often eliminates capital gains tax on inherited property when the beneficiary later sells.