Chapter 12 Passing It On — How the Federal Estate Tax Is Figured

The question If one of us dies, how is the federal estate tax worked out, and how much is left for the heirs?

The answer In the order the IRS describes: gross estate → deductions → taxable estate → add lifetime taxable gifts → tentative tax → minus the unified credit → estate tax. The screen draws each step as a bar and shows where the taxable estate sits against the 2026 basic exclusion amount ($15,000,000). For the example household, the credit covers the whole tentative tax, so the federal estate tax is $0. The screen lists, next to the result, the items it does not calculate — starting with state estate taxes.

12.0 In one line Gross estate → taxable estate → tax → credit. The pictures show the structure; the numbers are calculations under your assumptions.

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