Federal estate tax for Florida residents
Florida has no state estate tax — but federal estate tax still applies above the exemption (~$13.6M in 2026, scheduled to halve in 2026 sunset). Here's what triggers it, what reduces it, and the planning that matters.
Florida has no state estate tax. That's a real benefit — many states (NY, NJ, MA, CT, OR, WA) impose their own estate or inheritance tax on top of federal. Florida residents pay only federal estate tax, and only if their estate exceeds the federal exemption.
The current federal exemption is approximately $13.6M per person for 2026 — meaning estates under that threshold owe zero federal estate tax. The exemption is scheduled to drop to roughly $7M per person at the end of 2026 under current law (the sunset of the 2017 Tax Cuts and Jobs Act). Whether Congress extends the higher exemption is uncertain.
How the tax is calculated
- Gross estate: everything you own at death — real estate, financial accounts, retirement, life insurance, business interests, personal property — including assets that pass outside probate (POD accounts, joint property, trust assets).
- Less deductions: marital deduction (unlimited for assets passing to a US-citizen spouse), charitable deduction (unlimited for qualified charities), administrative expenses, debts, last-illness expenses.
- Equals taxable estate.
- Less applicable exclusion (~$13.6M for 2026, less prior taxable gifts).
- Equals tentative tax base × 40% (the federal estate-tax rate).
The 2026 exemption sunset
Under current law, the federal exemption drops at the end of 2026 from ~$13.6M to ~$7M per person (adjusted for inflation). For anyone with a net worth between $7M and $13.6M, the next 12 months may matter.
- If you die in 2026 with $10M: exemption covers everything. Zero tax.
- If you die in 2027 (post-sunset) with $10M: exemption ~$7M, taxable $3M, tax ~$1.2M.
- Lifetime gifting before sunset: large gifts now lock in the higher exemption (the 'use it or lose it' window).
- Spousal portability: surviving spouses can inherit the deceased spouse's unused exemption (preserving up to ~$27.2M total in 2026).
Whether sunset actually happens depends on Congress. The 2026 exemption may be extended or modified. For HNW families, planning under both scenarios is prudent.
Marital deduction — the most powerful tool
Assets passing to a US-citizen surviving spouse are deductible without limit. This effectively defers federal estate tax to the second spouse's death.
- Outright bequest to spouse: full marital deduction, but spouse owns it outright at second death.
- QTIP trust to spouse: full marital deduction, but principal preserved for first spouse's named beneficiaries (see our blended-families guide).
- Non-citizen spouse: marital deduction limited; QDOT trust (Qualified Domestic Trust) is the workaround. Specialized planning required.
- Spouse's own death: the second spouse's estate gets full federal exemption again (no double-exemption, but full single-exemption applies).
Charitable deduction
- Bequests to qualified 501(c)(3) charities: fully deductible from the gross estate.
- Charitable remainder trusts (CRTs): lifetime income to family + charitable remainder. Income tax deduction during life + estate-tax savings at death.
- Charitable lead trusts (CLTs): charity gets income for years; family gets remainder. Reverse structure.
- Bequests of appreciated assets: charity sells without gain (charity is tax-exempt); estate gets full deduction.
Common HNW estate-tax planning tools
- Annual exclusion gifts: $18,000/year per recipient (2026 figure) — not counted toward lifetime exemption. Couple can gift $36k/recipient.
- Lifetime gifting: uses the lifetime exemption now; appreciation post-gift escapes the donor's estate.
- Irrevocable Life Insurance Trust (ILIT): removes life insurance proceeds from taxable estate.
- Grantor Retained Annuity Trust (GRAT): discounted transfer of appreciating assets; sophisticated estate-tax tool.
- Spousal Lifetime Access Trust (SLAT): removes assets from one spouse's estate; spouse retains indirect access during life.
- Family Limited Partnerships / LLCs: discounting techniques for transferring business or real estate interests.
- Dynasty trusts: long-term trusts for grandchildren and beyond — Florida allows dynasty trusts up to 360 years.
These are sophisticated tools requiring careful planning — typically attorneys plus CPAs plus financial advisors working together. Costs and complexity scale with the estate.
What's NOT in the federal estate tax estate
- Life insurance owned by an ILIT or another person: out of estate.
- Irrevocable trust assets (most types): out of estate.
- Completed lifetime gifts to non-spouse: out of estate (but use the lifetime exemption).
- Property held by a spouse alone with no joint titling.
When to start planning
Federal estate tax planning makes sense for:
- Net worth over $7M individually or $14M as a couple: at risk under post-sunset rules.
- Net worth over $13.6M individually or $27M as a couple: definitely at risk under current rules.
- Significant appreciating assets: even mid-range estates with concentrated growth (a successful business, lots of real estate appreciation) can exceed the exemption over time.
- Florida residents who recently moved from a state-estate-tax state: should re-examine plans — your state-tax exposure dropped to zero; your federal exposure is unchanged.
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