The amount that is excluded from calculating the amount of estate taxes owed at the federal level. With regard to state estate taxes
, most states exclude the exemption amount from calculating the estate tax bill but several do not. Check with your state taxing authority to be sure.
In 2010 and 2011 the federal estate tax exemption was $5,000,000, and it increased to $5,120,000 in 2012, $5,250,000 in 2013 and $5,340,000 in 2014, which means that if an estate is valued at $5,340,000 or less and death occurs in 2014, then the estate will not owe any federal estate taxes. Below are links to charts that show the amount of the federal estate tax exemption from 1916 through 2014:
Chart Showing Federal Estate Tax Exemption: 1916 - 1997
Chart Showing Federal Estate Tax Exemption: 1997 - 2014
In addition, for 2011 and later years, the federal estate tax exemption has been made "portable" between married couples:
What is Portability of the Estate Tax Exemption?
Also Known As: Applicable Exclusion Amount, Estate Tax Exclusion, Estate Tax Exemption