Estate Tax (Form 706) - Tax Year 2023 - Explanation and Key Rules

Sep 19, 2026

Estate Tax (Form 706) outlines how the U.S. estate tax is determined for a decedent who dies in 2023. It explains what is included in the gross estate, how taxable gifts after 1976 are added, and which deductions may reduce the taxable estate (funeral and administrative expenses, debts, and state death taxes). It covers key thresholds and calculations, marital deduction rules, noncitizen spouse limitations and increased annual exclusions, terminable interests restrictions, and marital estate tax planning including portability of unused exclusion.

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TAX YEAR 2023

Estate Tax (Form 706) Overview

Deductions and Taxable Estate Calculation Example

Marital Deduction Rules

Noncitizen Spouses

Terminable Interests

Marital Estate Tax Planning and Portability

| | TAX YEAR
2023
Estate Tax (Form 706) | | --- | --- | Electronic Filing Center 1313 Midway Rd Menasha, WI 54952 920-733-8637 |
Estate Tax (Form 706)
At death, all property of the decedent is included in the gross estate for estate tax. Taxable gifts made after 1976 are added to the total. The estate is allowed deductions for funeral expenses, administrative expenses, decedent’s debts, and state death taxes. Most property passing to a surviving spouse or charity is also fully deductible.

States with Estate or Inheritance Tax | | | | | --- | --- | --- | --- | | Connecticut | Kentucky* | Nebraska* | Rhode Island | | District of Columbia | Maine | New Jersey* | Vermont | | Hawaii | Maryland** | New York | Washington | | Illinois | Massachusetts | Oregon | | | Iowa* | Minnesota | Pennsylvania* | | | * Inheritance tax only. **Has both an estate and an inheritance tax. | | | | Estate tax is due if the net estate is more than the estate tax exclusion for the year of death ($12,920,000 in 2023). The estate receives a credit for gift tax payable by the donor during life. Example: Henry died in 2023. He had the following assets: House .................................................................................. $2,675,000 Cabin ......................................................................................... 950,000 Bank accounts..................................................................... 1,100,000 Brokerage account ............................................................ 4,250,000 Household and personal property ................................. 560,000 Vehicles ..................................................................................... 145,000 IRA rollover account ...................................................... 1,200,000 Total ................................................................................ $10,880,000 Henry gave each of his four children $750,000 when his wife died in 2011. He reported taxable gifts of $2,948,000 ($750,000 minus $13,000 annual exclusion per gift). Henry made no other taxable gifts during his lifetime and paid no gift tax in 2011. Henry’s estate paid funeral and other expenses of $150,000 and state death tax of $300,000. Tax on Henry’s estate is calculated as follows: Total gross estate ........................................................... $10,880,000 Less allowable expense deductions ......................... ( 150,000) Tentative taxable estate................................................. 10,730,000 State death tax deduction............................................. ( 300,000) Taxable estate ................................................................... 10,430,000 Adjusted taxable gifts made after 1976.................... 2,948,000 Total .................................................................................. 13,378,000 Tentative tax ........................................................................ 5,297,000 Gift tax payable on gifts after 1976 ............................. ( 0) Gross estate tax .................................................................. 5,297,000 Allowable credit................................................................ (5,113,800) Estate tax ............................................................................ $183,200 Marital Deduction An unlimited deduction is allowed for transfers to a spouse during life and for assets passing to a surviving spouse at death. Exceptions: • Assets passing to a spouse who is not a U.S. citizen. • Certain terminable interests. The marital deduction does not exclude assets from tax but rather postpones tax until the death of the second spouse. Assets that pass to a surviving spouse are included in the surviving spouse’s estate and taxed at his or her death. Transfers that could allow taxable assets to pass to someone other than the spouse without estate tax generally do not qualify for the

FAQs

What does the Estate Tax (Form 706) include when someone dies?

The gross estate generally includes all property of the decedent. Taxable gifts made after 1976 are added to the total, and the estate may claim deductions such as funeral and administrative expenses, debts, and state death taxes.

When is estate tax due for tax year 2023?

Estate tax is due if the net estate is more than the estate tax exclusion for the year of death, which is $12,920,000 in 2023.

How does the marital deduction work, and what are the main exceptions?

An unlimited marital deduction generally applies to qualified transfers to a spouse and assets passing to a surviving spouse at death. Exceptions include situations where the spouse is not a U.S. citizen and certain terminable interests.

Sep 19, 2026

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