A federal estate tax return, Form 706, may be required as part of estate administration when a U.S. citizen or resident dies with a large estate. A return may also be filed for other reasons even when no estate tax is due, including to preserve a deceased spouse’s unused estate and gift tax exclusion through a portability election.
For individuals who die in 2026, the federal estate and gift tax basic exclusion amount is $15 million. Determining whether a return is required involves more than simply adding the assets that pass under the will. The calculation can include non-probate assets, certain lifetime gifts, jointly owned property, life insurance, retirement accounts, business interests, trusts, and other property.
For individuals who die in 2026, the federal estate and gift tax basic exclusion amount is $15 million. This means that an estate generally is not required to file a federal estate tax return solely because of its value unless the decedent’s gross estate, adjusted taxable gifts, and certain other amounts exceed the applicable filing threshold.
The top federal estate tax rate remains 40%.
The $15 million exclusion took effect on January 1, 2026. Under current law, the exclusion will be adjusted for inflation in future years.
An estate may still need or choose to file Form 706 even when no federal estate tax is due. For example, the executor of a married decedent may file Form 706 to elect portability, which allows a surviving spouse to use the deceased spouse’s unused federal estate and gift tax exclusion. Portability is not automatic.
For certain estates that were not otherwise required to file Form 706, Rev. Proc. 2022-32 provides a simplified procedure for making a late portability election by filing on or before the fifth anniversary of the decedent’s death. The simplified procedure does not apply when the estate was independently required to file a federal estate tax return.
The gross estate includes all property in which the decedent had an interest (including property outside the United States).
It also includes:
Certain transfers made during the decedent’s life without an adequate and full consideration in money or money’s worth,
Annuities,
The includible portion of joint estates with right of survivorship,
The includible portion of tenancies by the entirety,
Certain life insurance proceeds (even though payable to beneficiaries other than the estate),
Digital assets,
Property over which the decedent possessed a general power of appointment,
Dower or curtesy (or statutory estate) of the surviving spouse, and
Community property to the extent of the decedent’s interest as defined by applicable law.
The executor of a decedent’s estate uses Form 706 to figure the estate tax imposed by chapter 11 of the Internal Revenue Code. This tax is levied on the entire taxable estate and not just on the share received by a particular beneficiary. Form 706 is also used to figure the generation-skipping transfer (GST) tax imposed by chapter 13 on direct skips (transfers to skip persons of interests in property included in the decedent’s gross estate).
You must file Form 706 to report estate and/or GST tax within 9 months after the date of the decedent’s death.
If you find that you must change something on a return that has already been filed, you should:
File another Form 706;
Enter “Supplemental Information” across the top of page 1 of the form; and
Attach a copy of pages 1, 2, 3, and 4 of the original Form 706 that has already been filed
If you have already been notified that the return has been selected for examination, you should contact a tax attorney with federal estate tax experience.
Section 6651 provides for penalties for both late filing and for late payment unless there is reasonable cause for the delay. The law also provides for penalties for willful attempts to evade payment of tax. The late filing penalty will not be imposed if the taxpayer can show that the failure to file a timely return is due to reasonable cause.
Section 6662 provides a 20% penalty for the underpayment of estate tax that exceeds $5,000 when the underpayment is attributable to valuation understatements. A valuation understatement occurs when the value of property reported on Form 706 is 65% or less of the actual value of the property.
This penalty increases to 40% if there is a gross valuation understatement. A gross valuation understatement occurs if any property on the return is valued at 40% or less of the value determined to be correct.
Penalties also apply to late filing, late payment, and underpayment of GST taxes.
A formal estate tax closing letter can be requested 9 months after Form 706 is filed.
Instead of an ETCL, the executor of the estate may request an account transcript, which reflects transactions including the acceptance of Form 706 or the completion of an examination. Account transcripts are available online to registered tax professionals using the Transcript Delivery System (TDS) or to authorized representatives making requests using Form 4506-T.
Certain estates are required to report to the IRS and the recipient, the estate tax value of each asset included in the gross estate within 30 days of the due date (including extensions) of Form 706 or the date of filing Form 706 if the return is filed late. The basis of certain assets when sold or otherwise disposed of must be consistent with the basis (estate tax value) of the asset when it was received by the beneficiary. To satisfy the consistent basis reporting requirements, the estate must file Form 8971, Information Regarding Beneficiaries Acquiring Property From a Decedent.
Last Updated August 2026