Back to Estate Planning Basics
Federal Estate And Gift Taxes
(Unified Transfer Tax Rate Schedule)
If Taxable Estate |
Tentative Tax Is |
|||
Is Over $ |
But Not Over $ |
Tax $ | Plus % |
Of Excess Over $ |
| 0 | 10,000 | 0 | 18% | 0 |
| 10,000 | 20,000 | 1,800 | 20% | 10,000 |
| 20,000 | 40,000 | 3,800 | 22% | 20,000 |
| 40,000 | 60,000 | 8,200 | 24% | 40,000 |
| 60,000 | 80,000 | 13,000 | 26% | 60,000 |
| 80,000 | 100,000 | 18,200 | 28% | 80,000 |
| 100,000 | 150,000 | 23,800 | 30% | 100,000 |
| 150,000 | 250,000 | 38,800 | 32% | 150,000 |
| 250,000 | 500,000 | 70,800 | 34% | 250,000 |
| 500,000 | 750,000 | 155,800 | 37% | 500,000 |
| 750,000 | 1,000,000 | 248,300 | 39% | 750,000 |
| 1,000,000 | 1,250,000 | 345,800 | 41% | 1,000,000 |
| 1,250,000 | 1,500,000 | 448,300 | 43% | 1,250,000 |
| 1,500,000 | 2,000,000 | 555,800 | 45% | 1,500,000 |
| 2,000,000 | 2,500,000 | 780,800 | 49% | 2,000,000 |
| 2,500,000 | 3,000,000 | 1,025,800 | 535% | 2,500,000 |
| 3,000,000 | 10,000,000 | 1,290,800 | 55% | 3,000,000 |
| 10,000,000 | 17,184,000 | 5,140,800 | 60% | 10,000,000 |
| 17,184,000 | 9,451,200 | 55% | 17,184,000 | |
Unified Credit
Each person has a unified credit which will reduce the amount of estate or gift taxes which must be paid. For 2000 and 2001, this credit is $220,550, equivalent to having $675,000 of assets not subject to federal estate tax. Over the next few years, the unified credit will increase, as will the equivalent amount of estate assets not subject to the estate tax (the "applicable exclusion amount"). The table below shows these changes.
| Year | Unified Credit | Applicable Exclusion Amount |
| 2000 and 2001 | 110,550 | 675,000 |
| 2002 and 2003 | 229,800 | 700,000 |
| 2004 | 287,300 | 850,000 |
| 2005 | 326,300 | 950,000 |
| 2006 and later | 345,800 | 1,000,000 |
Estates over $10,000,000 have a 5% surcharge until the benefit of the lower graduated tax brackets has been recaptured.
Credit For State Death Tax Paid
If the state in which the decedent lived imposes a state death tax, a credit is allowed for all or a portion of this tax in determining the amount of federal estate tax due.
Many states collect only the amount of the maximum credit allowed. The chart below may be used to calculate the credit.
Adjusted Taxable Estate |
Credit On Column 1 $ | Plus % | Of Excess Over $ | |
| At Least $ | But Less Than $ | |||
| 0 | 40,000 | 0 | 0.0% | 0 |
| 40,000 | 90,000 | 0 | 0.8% | 40,000 |
| 90,000 | 140,000 | 400 | 1.6% | 90,000 |
| 140,000 | 240,000 | 1,200 | 2.4% | 140,000 |
| 240,000 | 440,000 | 3,600 | 3.2% | 240,000 |
| 440,000 | 640,000 | 10,000 | 4.0% | 440,000 |
| 640,000 | 840,000 | 18,000 | 4.8% | 640,000 |
| 840,000 | 1,040,000 | 27,600 | 5.6% | 840,000 |
| 1,040,000 | 1,540,000 | 38,800 | 6.4% | 1,040,000 |
| 1,540,000 | 2,040,000 | 70,800 | 7.2% | 1,540,000 |
| 2,040,000 | 2,540,000 | 106,800 | 8.0% | 2,040,000 |
| 2,540,000 | 3,040,000 | 146,800 | 8.8% | 2,540,000 |
| 3,040,000 | 3,540,000 | 190,800 | 9.6% | 3,040,000 |
| 3,540,000 | 4,040,000 | 238,800 | 10.4% | 3,540,000 |
| 4,040,000 | 5,040,000 | 290,800 | 11.2% | 4,040,000 |
| 5,040,000 | 6,040,000 | 402,800 | 12.0% | 5,040,000 |
| 6,040,000 | 7,040,000 | 522,800 | 12.8% | 6,040,000 |
| 7,040,000 | 8,040,000 | 650,800 | 13.6% | 7,040,000 |
| 8,040,000 | 9,040,000 | 786,800 | 14.4% | 8,040,000 |
| 9,040,000 | 10,040,000 | 930,800 | 15.2% | 9,040,000 |
| 10,040,000 | 1,082,800 | 16.0% | 10,040,000 | |
The adjusted taxable estate is the taxable estate reduced by $60,000.