An Estate tax is charged to a decedent’s estate when their assets pass to their beneficiaries. The Federal government allows for a Federal Estate Tax Exemption. This allows a decedent to pass a certain amount estate tax free. The exemption amount changes each year. The Federal Estate Tax Exemption amount for 2026 is $15 million.

Many states now have death taxes that are in addition to the federal estate tax. The State of Hawaii currently has an estate tax exemption of $5.49 million which causes a significant difference in federal and state estate taxes. 

The federal Gift Tax Exemption is unified with the federal Estate Tax Exemption, whereby a taxpayer has up to $15 million (adjusted for inflation annually) for lifetime gifts and value of assets at death. The annual Gift Tax exclusion is currently $19,000 but subject to change.