The formulas
- DSUE = lesser of the basic exclusion amount or (deceased spouse's applicable exclusion - amount on which tentative tax was figured)
- Survivor's applicable exclusion = basic exclusion + DSUE
- Estate tax = 40% x amount above the applicable exclusion
How it works
Section 2010(c)(4) defines the DSUE amount as the lesser of the basic exclusion amount or the excess of the last deceased spouse's applicable exclusion over the amount on which the tentative tax was determined for that estate. The executor elects portability on a timely Form 706, and the election is irrevocable.
The IRS estate tax page lists the 2026 filing threshold at $15,000,000, and Section 2010(c)(3) now sets the basic exclusion at $15,000,000, indexed after 2026. With the exclusion above $1,000,000, every dollar of estate above the applicable exclusion is taxed at the 40% top rate. This tool assumes the first spouse made no prior use of a DSUE of their own.
Illustrative figures only. Check the result against your firm's methodology before relying on it.
Common questions
Do I need to file Form 706 for a small estate?
Yes, to elect portability. The election is made only on a timely filed estate tax return.
Which spouse's DSUE counts if I remarry?
Only the last deceased spouse. A later spouse's death replaces the earlier DSUE.
Can the IRS examine the first return later?
Yes. Section 2010(c)(5)(B) lets the IRS examine it to set the DSUE amount even after the normal assessment period.
Sources
- 26 U.S.C. 2010, Unified credit against estate tax (LII)
- IRS Estate tax (filing thresholds by year of death)
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