Federal Estate Tax Exemption

The Federal Estate Tax Exemption is the amount of money an individual can pass on to their heirs without incurring federal estate taxes. As of 2023, this exemption is approximately $12.92 million per person. If the total value of an estate exceeds this amount at the time of death, the excess may be taxed. This tax is generally paid out of the estate's assets before distribution, meaning heirs receive less if the estate is large enough to be taxed. The exemption helps reduce the tax burden on smaller estates and promotes wealth transfer across generations.