The federal estate tax is a tax on the transfer of the estate of a person who dies. It applies to property that is transferred by will or, if the person has no will, according to state laws of intestacy. The estate tax is assessed on the current fair market value of the assets, meaning that the tax is calculated based on what the assets are worth today, not the original value at the time of purchase by the deceased. The federal estate tax ranges from rates of 18% to 40% and generally only applies to assets over $12.92 million in 2023. The IRS exempts estates of less than $12.92 million from the tax in 2023, so few people actually end up paying it. The estate tax has been an important source of federal revenue for a century, yet only a small fraction of U.S. estates is taxable, reflecting that exemption levels are high and transfers to surviving spouses are entirely excluded from taxable estates. Taxpayers commonly arrange their affairs to soften the impact of federal taxation.