The 2026 Estate Tax Exemption Is Now $15 Million and Permanent

The federal estate tax is a tax on the transfer of property at death. The exemption, formally the basic exclusion amount, is the value an estate can pass before any federal estate tax applies. For 2026, that exemption is $15,000,000 per person.

This is not an inflation-adjusted estimate or a rounded figure. It is the exact number Congress wrote into the tax code. Section 70106 of the One Big Beautiful Bill Act (Public Law 119-21), signed July 4, 2025, amended Internal Revenue Code section 2010 to set the basic exclusion amount at $15,000,000 for 2026. The IRS confirmed it in Revenue Procedure 2025-32, published in October 2025. The same $15,000,000 figure applies to the lifetime gift tax exemption and the generation-skipping transfer tax exemption.

For 2026 there is no inflation adjustment, because $15,000,000 is the statutory baseline year. Inflation indexing resumes in 2027, using 2025 as the base year, so the exemption will rise from $15,000,000 in later years.

The word permanent needs a precise meaning. The exemption is permanent in that it has no scheduled sunset. The prior law set an automatic expiration; the 2025 law removed it and added no new one. That is different from a guarantee. Any future Congress can change the exemption through new legislation. Permanent here means there is no expiration date built into the statute, not that the number can never move.

The top federal estate tax rate stays at 40%. The 2025 law did not touch it. The rate schedule technically starts at 18% on the first $10,000 of taxable value and climbs, reaching 40% at $1,000,001 and above. In practice the exemption absorbs every lower bracket, so a taxable estate pays 40% on the amount above $15,000,000.

To understand why this change mattered so much, you have to know what advisers were bracing for. The 2017 tax law, the Tax Cuts and Jobs Act, roughly doubled the estate tax exemption. By 2025 that doubled exemption had grown with inflation to $13,990,000 per person. But the 2017 law was written with a built-in expiration. The doubled exemption was scheduled to sunset at the end of 2025 and revert to its pre-2017 level, roughly $7,000,000 per person.

That looming cut drove years of planning. A married couple looking at a possible drop from about $28,000,000 of combined shelter down to roughly $14,000,000 had a real reason to act. Estate lawyers spent 2024 and 2025 helping clients lock in the higher exemption by making large lifetime gifts before the deadline, on the logic that using the exemption while it existed was a use-it-or-lose-it opportunity.

The One Big Beautiful Bill Act did two things at once. It canceled the scheduled sunset, so the exemption did not fall. And it went further, raising the exemption from $13,990,000 to $15,000,000 per person, an increase of $1,010,000. The feared cut did not just get postponed. It was removed, and the number went up.

Here is the part that gets lost in the coverage. For the overwhelming majority of American families, the federal estate tax was never a real concern, and at $15,000,000 it is even less of one.

The numbers are stark. The Tax Policy Center estimates that only about 0.25% of people who die file any estate tax return at all, and only about 0.14% have an estate large enough to owe tax. For deaths in 2023, that worked out to roughly 4,000 taxable estates nationwide. At the higher $15,000,000 exemption, the Tax Policy Center projects the count of taxable estates falls further, potentially below 3,000 a year out of roughly 2.9 million annual deaths.

Put another way: fewer than one estate in a thousand owes any federal estate tax. Even back when the exemption was around $5,000,000, only a few thousand estates a year paid it. The tax has always reached a very narrow slice at the very top. The 2026 exemption narrows that slice further.

If estate tax was never the reason your family needed an estate plan, it helps to be clear on what the reason actually is. Our estate planning checklist walks through the documents that do the real work for an estate of any size: a will, a trust, powers of attorney, and beneficiary designations.

The federal exemption is only half the picture. The federal estate tax is not the only death tax in the country. As of 2026, twelve states plus the District of Columbia levy their own estate tax, and five states levy an inheritance tax. Maryland levies both. Iowa fully repealed its inheritance tax effective January 1, 2025, so it no longer belongs on either list.

The two taxes work differently. An estate tax is paid by the estate before assets are distributed. An inheritance tax is paid by the person who receives the property, and the rate usually depends on how closely that person was related to the decedent. Spouses, and usually children, are typically exempt from inheritance tax.

The figure that surprises people is how low some state thresholds are. The federal exemption is $15,000,000. Oregon taxes estates above just $1,000,000. Massachusetts starts at $2,000,000. An estate of, say, $3,000,000, far below any federal concern, can owe a real state estate tax bill in those states. Where you live, and where you own property, can matter more than the federal number.

One state quirk is worth calling out. New York applies a cliff. If a New York estate exceeds the $7,350,000 exemption by more than 5%, the estate loses the exemption entirely and is taxed from the first dollar. An estate just over the line can owe far more than an estate just under it, which makes threshold planning around that number unusually important.

A married couple does not automatically get a $30,000,000 combined exemption. They get there through portability, and portability requires a filing.

Here is how it works. When the first spouse dies, that spouse’s estate may not use the full $15,000,000 exemption. The unused part is called the Deceased Spousal Unused Exclusion, or DSUE. Portability lets the surviving spouse add that unused amount to their own $15,000,000, which is how a couple shelters up to $30,000,000 from federal estate and gift tax.

The catch: portability is not automatic. To preserve the first spouse’s unused exemption, the executor of that first estate must file IRS Form 706, the United States Estate Tax Return, and make the portability election on it. This is true even when the first estate is far below the filing threshold and owes no estate tax of its own. If no one files Form 706, the DSUE is simply lost.

The deadlines matter:

• The standard deadline to file Form 706 is nine months after the date of death.
• An automatic six-month extension is available by filing Form 4768 before the nine-month deadline, for fifteen months total.
• An estate that had no filing requirement on its own can use a longer late-filing window. Under IRS Revenue Procedure 2022-32, such an estate may file a late portability return up to five years from the date of death without first requesting a private letter ruling.

If you signed a will or trust years ago, the new exemption is a reason to have it reviewed. The problem is not that old documents are invalid. It is that some of them were built around a much smaller exemption, and a clause that made sense at $1,000,000 or $5,000,000 can produce an unwanted result at $15,000,000.

The classic example is a formula clause. Many older wills and trusts for married couples contain a credit-shelter trust, also called a bypass trust. The document says, in effect, fund a separate trust with the largest amount that can pass free of federal estate tax, and leave the rest to the surviving spouse. When the exemption was $675,000 or $1,000,000, that formula moved a sensible slice into the bypass trust.

With a $15,000,000 exemption, that same formula can sweep an entire estate into the bypass trust and leave the surviving spouse with little or nothing in their own name. A document written to protect a spouse can end up sidelining them. That is not a hypothetical drafting quirk. It is a real outcome that old formula language can force.

If a review prompts you to start fresh, it is worth understanding how the two core documents divide the work before you choose. We compare them directly in living trust versus will, and the step-by-step walkthrough in how to write a last will and testament covers the clauses that matter once estate tax is off the table.

There is a second shift worth understanding. For most families, the planning goal has moved from avoiding estate tax to capturing the step-up in basis. When someone dies, most assets in their estate get their cost basis reset to the value at the date of death. An heir who later sells can owe far less capital gains tax as a result. Aggressive lifetime gifting, which made sense when a large estate faced a 40% estate tax, can backfire if it removes assets from the estate and forfeits that basis step-up. When almost no one owes estate tax, keeping appreciated assets in the estate to capture the step-up often beats giving them away.

The exemption is not just an estate-tax number. It is also the lifetime gift tax exemption, and it works alongside a separate, smaller allowance you can use every year.

The annual gift tax exclusion for 2026 is $19,000 per recipient, unchanged from 2025. You can give up to $19,000 to as many people as you like in a year without filing a gift tax return and without using any of your $15,000,000 lifetime exemption. A married couple can combine their exclusions and give $38,000 per recipient through gift-splitting. For a gift to a spouse who is not a US citizen, a larger annual exclusion of $194,000 applies in 2026.

Gifts above the annual exclusion are not automatically taxed. They count against your $15,000,000 lifetime exemption. If you give a child $119,000 in one year, the first $19,000 is covered by the annual exclusion, and the remaining $100,000 is a reportable gift that reduces your lifetime exemption from $15,000,000 to $14,900,000. You owe gift tax only after you have used the entire $15,000,000.

This is why the estimator above adds prior taxable lifetime gifts back into the calculation. The lifetime exemption is a single shared pool. Gifts you make during life and assets you leave at death draw from the same $15,000,000.