Updated October 18, 2026. Quick answer: Lines 1 to 8 of Part II carry the totals from Part V into a running calculation. The gross estate and the deductions come from Part V, the state death tax deduction is subtracted, prior taxable gifts are added, and the tentative tax from Table A is reduced by gift tax paid or payable. The result on line 8 is the gross estate tax.
IRS estate-administration forms, read line by line: Form 706-NA Part II lines 1 to 8.
What lines 1 to 8 do
The instructions open the part this way: “In general, the estate tax is figured by applying the unified rates shown in Table A to the total of transfers both during life and at death, and then subtracting the gift taxes, as refigured based on the date of death rates.” Of the part as a whole they say “You must complete Part II”. The full return is explained on the Form 706 page.
The form captions run in order. Line 1 is “Total gross estate less exclusion from Part V, item 13”. Line 2 is “Tentative total allowable deductions from Part V, item 24”. Line 3a is “Tentative taxable estate. Subtract line 2 from line 1”, line 3b is the state death tax deduction, and line 3c is “Taxable estate. Subtract line 3b from line 3a”. Line 5 says “Add lines 3c and 4”.
Line 1: which column of Part V
The instructions say “If you elected alternate valuation on Part III, line 1, enter the amount you entered in the “Alternate value” column of Part V, item 13. Otherwise, enter the amount from the “Value at date of death” column.” The election itself is described in Part III and on the alternate valuation date page.
Line 3b: state death tax deduction
“You may take a deduction on line 3b for estate, inheritance, legacy, or succession taxes paid on any property included in the gross estate as the result of the decedent’s death to any state or the District of Columbia.” On timing: “You may claim an anticipated amount of deduction and figure the federal estate tax on the return before the state death taxes have been paid.” But “the deduction cannot be finally allowed unless you pay the state death taxes and claim the deduction within 4 years after the return is filed”, with exceptions the instructions list. They also note “The deduction is not subject to dollar limits.” State rules are summarized on the estate tax by state page.
Lines 4, 6 and 7: gifts and Table A
Line 4 is captioned “Adjusted taxable gifts. See instructions”. Line 6 is “Tentative tax on the amount on line 5 from Table A in the instructions”. Line 7 is “Total gift tax paid or payable. See instructions”. The instructions provide three worksheets for lines 4 and 7, named Worksheet TG, the Line 4 Worksheet and the Line 7 Worksheet. On the records needed they say “You must have all of the decedent’s gift tax returns (Forms 709) before completing Worksheet TG”. If a return was examined: “if any of the returns were audited by the IRS, use the amounts that were finally determined as a result of the audits.”
Gifts with no return are covered too: “In addition, you must make a reasonable effort to discover any gifts in excess of the annual exclusion made by the decedent (or on behalf of the decedent under a power of attorney) for which no Forms 709 were filed.” The gift tax return is explained on the Form 709 who must file page.
One limit applies to line 7: “In figuring the line 7 amount, do not include any tax paid or payable on gifts made before 1977.” “The line 7 amount is a hypothetical figure used to figure the estate tax.”
For split gifts, the instructions give four conditions and then say “If all four conditions above are met, do not include these gifts on Part II, line 4 and do not include the gift taxes payable on these gifts on Part II, line 7.” Gift splitting itself is explained on the Form 709 gift splitting page.
Where the number comes from
Line 1 and line 2 come from Part V, which in turn totals the schedules. The state death tax deduction comes from the state’s own records: the instructions list the evidence to send, beginning with a “Certificate of the proper officer of the taxing state, or the District of Columbia”. Lines 4 and 7 come from the decedent’s gift tax returns through the worksheets.
Where it goes next
Line 8 is captioned “Gross estate tax. Subtract line 7 from line 6”. The calculation continues with the credits on Part II lines 9 to 12 and Part II lines 13 to 23. The totals on lines 1 and 2 are built on Parts IV and V.
Edition and line numbers
This page reads the Form 706 revision dated August 2025 and the Instructions for Form 706 revision dated July 2026. Those are the current files irs.gov served on 2026-10-18, byte-identical to the archived copies. The instructions state “For decedents dying after December 31, 2025.” The form itself says “To be filed for decedents dying after December 31, 2024.” Check the revision date printed on your Form 706 and the instruction edition for the year of death, and use the line numbers on that revision, because a different revision can number or word its lines differently.
Common mistakes
- Reading the wrong column of Part V for line 1. The instructions send you to the alternate value column only if “you elected alternate valuation on Part III, line 1”.
- Treating the line 3b deduction as final before the state tax is paid. The instructions say “the deduction cannot be finally allowed unless you pay the state death taxes and claim the deduction within 4 years after the return is filed”.
- Including tax on early gifts in line 7. The instructions say “do not include any tax paid or payable on gifts made before 1977.”
Related: Form 706, estate tax calculator, alternate valuation date, Form 709 gift splitting, and estate tax by state.
Sources
- Instructions for Form 706 (Rev. July 2026): https://www.irs.gov/pub/irs-pdf/i706.pdf
- Form 706 (Rev. August 2025), United States Estate (and Generation-Skipping Transfer) Tax Return: https://www.irs.gov/pub/irs-pdf/f706.pdf
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.