Paying for an aging loved one’s care sometimes results in a medical expense deduction. Paying for a deceased loved one’s funeral, on the other hand, does not provide any income tax deduction—nothing in the Tax Code allows taxpayers to write off burial costs, cremation or other funerary bills.
Still, there are federal government programs designed to help with funeral expenses, and there is a way that funeral expenses can reduce an estate-tax bill—not an income tax bill—for a small percentage of families. Bottom Line Personal asked tax expert Abby Eisenkraft and estate-tax expert Martin Shenkman for guidance…
To be eligible, the deceased must have a work history sufficient to qualify for Social Security benefits. If there is no surviving spouse, a dependent child might be able to receive this benefit instead. This death benefit is just $255, which barely makes a dent in funeral costs—the amount hasn’t been increased since the benefit was introduced in 1954. For details, complete form SSA-8, Application for Lump-Sum Death Payment (SSA.gov/forms/ssa-8.html) or contact the Social Security Administration (800-772-1213). Recently proposed legislation could push this benefit up to $2,900, but as of late 2024, it remained unclear whether that legislation would pass.
As of late 2024, these allowances typically are capped at $978 for burial costs…$978 for a burial plot…plus $231 for a headstone or marker, though allowances can be higher for service-related deaths.
Alternative: Most or all of the burial costs might be covered if the veteran is buried in a veteran’s cemetery. Complete form VA Form 21P-530EZ, Application for Burial Benefits, or contact the VA for details (800-827-1000).
If funeral expenses are paid directly out of the deceased’s estate, it could slightly reduce the size of the estate that is subject to estate taxes. But this won’t produce tax savings for the vast majority of families—the federal estate-tax exemption is currently nearly $14 million, which is so high that only very wealthy families pay federal estate taxes at all. That said, the estate-tax exemption could be lower as soon as 2026.
Important: Both your will and your living will should include details about your funerary preferences—including your desire for your funeral costs to be paid out of your estate, if that’s your intention. Providing this information in your will authorizes your executor to use your estate to pay funeral costs. Including funerary information in your living will greatly increases the odds that your loved ones will be aware of your preferences in time to arrange the funeral you intended—your will might not be read until after your funeral already has occurred.
