Back to Estate Tax FAQ
|
Taxable Estate up to... |
Tax Rate |
Marginal Tax Amount |
Total Tax Amount |
| 10,000 | 18% | 1,800 | 1,800 |
| 20,000 | 20% | 2,000 | 3,800 |
| 40,000 | 22% | 4,400 | 8,200 |
| 60,000 | 24% | 4,800 | 13,000 |
| 80,000 | 26% | 5,200 | 18,200 |
| 100,000 | 28% | 5,600 | 23,800 |
| 150,000 | 30% | 15,000 | 38,800 |
| 250,000 | 32% | 32,000 | 70,800 |
| 500,000 | 34% | 85,000 | 155,800 |
| 750,000 | 37% | 92,500 | 248,300 |
| 1,000,000 | 39% | 97,500 | 345,800 |
| 1,250,000 | 41% | 102,500 | 448,300 |
| 1,500,000 | 43% | 107,500 | 555,800 |
| 2,000,000 | 45% | 225,000 | 780,800 |
In the absence of the estate tax lifetime credit, every taxpayer would pay
18% of taxable estate value on the first $10,000 of estate value. The total
tax
of
an estate
with taxable value of $10,000 would be the value in the "Total Tax Amount" column:
$10,000 times 18%, or $1,800. Since the estate tax has a progressive rate structure,
however, the next $10,000 of taxable estate would be taxed at a higher rate:
20 percent. The "marginal tax amount"--
the tax imposed at the higher rate-- would be $10,000 times 20%, or $2,000.
Added to the $1,800 in tax on the first $10,000 in estate value, the total
tax amount on an estate with taxable value of $20,000 would be $3,800. So in
this table, the final column represents the total amount of estate tax
that would be owed (if there were no credit) for each value of an estate.
As the table shows, an estate with taxable value of
$2,000,000 would owe $780,800 in the absence of a credit. This means that the
lifetime
credit
of
$780,800 against estate and gift taxes is equivalent to a lifetime exemption of
$2,000,000.