2021 Estate Tax Exemption
The 2021 Estate Tax Exemption is $11,700,000.
Effective 2021-01-01Source: Rev. Proc. 2020-45 (IRS)Verified 2026-08-29
Compared with 2020
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Basic exclusion amount | $11,580,000 | $11,700,000 | +$120,000 (+1.0%) |
Who it applies to
Executors of estates of decedents dying in calendar year 2021
What changed this year, and why
For an estate of a decedent dying in calendar year 2021, the basic exclusion amount is $11,700,000, up from $11,580,000 in 2020. This amount is used to determine the unified credit against estate tax under IRC § 2010.
Common questions
- What is the basic exclusion amount used for?
- The basic exclusion amount is the figure used to calculate the unified credit that offsets estate tax liability under IRC § 2010.
Which estates have to file at all
For a person who died in 2021, the executor must file Form 706 if the decedent was a U.S. citizen or resident and either of two conditions is met. First, the estate must file if the gross estate, plus adjusted taxable gifts and any specific exemption, is more than $11,700,000. Second, the estate must also file if the executor elects to transfer the deceased spousal unused exclusion (DSUE) amount to the surviving spouse, even if the gross estate is well below the dollar threshold. To decide whether the dollar test in the first condition is crossed, the executor adds the decedent's adjusted taxable gifts, the total specific exemption for gifts made in the relevant period, and the value of the gross estate as of the date of death. If the sum exceeds the limit, a return is due regardless of whether any tax will actually be owed after credits. Estates below the limit that do not need to make a portability election generally do not have to file at all.
Which Estates Must File For decedents who died in 2021, Form 706 must be filed by the executor of the estate of every U.S. citizen or resident: a. Whose gross estate, plus adjusted taxable gifts and specific exemption, is more than $11,700,000; or b. Whose executor elects to transfer the deceased spousal unused exclusion (DSUE) amount to the surviving spouse, regardless of the size of the decedent's gross estate.
Instructions for Form 706 (Rev. September 2021), United States Estate (and Generation-Skipping Transfer) Tax Return (IRS)
What counts toward the exemption
The gross estate includes all property in which the decedent had an interest, including real property located outside the United States. Beyond direct ownership, it also includes certain transfers made during the decedent's life without adequate and full consideration, annuities, the includible portion of joint estates with right of survivorship and tenancies by the entirety, certain life insurance proceeds even if payable to beneficiaries other than the estate, 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. This comprehensive definition means that many assets pass into the gross estate even if they are not part of the probate estate or are held in joint names. Understanding what counts toward the exemption is essential for determining whether the estate exceeds the filing threshold and whether portability planning is appropriate.
The gross estate includes all property in which the decedent had an interest (including real property outside the United States).
Instructions for Form 706 (Rev. September 2021), United States Estate (and Generation-Skipping Transfer) Tax Return (IRS)
The nine-month deadline and the extension
Form 706 must be filed within 9 months after the date of the decedent's death to report estate and/or GST tax. If you are unable to file by the due date, you may receive an extension of time to file. Use Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, to apply for an automatic 6-month extension of time to file. This means the initial deadline is 9 months from death, and with an extension, the deadline is extended by an additional 6 months. Missing these deadlines can result in penalties and interest charges. For estates that need to make a portability election to transfer the deceased spousal unused exclusion to a surviving spouse, timely filing is especially critical because the election is only valid if Form 706 is filed within the 9-month period or before the 6-month extension period ends.
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 are unable to file Form 706 by the due date, you may receive an extension of time to file. Use Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, to apply for an automatic 6-month extension of time to file.
Instructions for Form 706 (Rev. September 2021), United States Estate (and Generation-Skipping Transfer) Tax Return (IRS)
Carrying an unused exemption to a surviving spouse
An executor can only elect to transfer the DSUE amount to the surviving spouse if Form 706 is filed timely, that is, within 9 months of the decedent's date of death or, if you have received an extension of time to file, before the 6-month extension period ends. This portability election allows a surviving spouse to use any unused portion of the deceased spouse's basic exclusion amount in addition to their own exemption. Executors who did not have a filing requirement under section 6018(a) but failed to timely file Form 706 to make the portability election may be eligible for an extension under Rev. Proc. 2017-34. Under this relief provision, executors filing to elect portability may now file Form 706 on or before the second anniversary of the decedent's death rather than the normal 9-month deadline. However, this special extension is only available for portability elections, not for estates that are otherwise required to file under the general filing rules.
An executor can only elect to transfer the DSUE amount to the surviving spouse if the Form 706 is filed timely, that is, within 9 months of the decedent's date of death or, if you have received an extension of time to file, before the 6-month extension period ends.
Instructions for Form 706 (Rev. September 2021), United States Estate (and Generation-Skipping Transfer) Tax Return (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Rev. Proc. 2020-45 (IRS)
- Basic exclusion amount
For an estate of any decedent dying in calendar year 2021, the basic exclusion amount is $11,700,000 for determining the amount of the unified credit against estate tax under § 2010.