High earners · Estate tax
The 2026 estate tax exemption lets each person leave $15 million free of federal tax.
Public Law 119-21, the One Big Beautiful Bill Act, set that amount from January 1, 2026. It has no end date, and it rises with inflation from 2027. For a married couple, portability can pass the first spouse’s unused exemption to the survivor.
Updated · Sources
Federal estate tax, 2026
- $15M
- is the basic exclusion amount for a death in 2026, and for gifts made that year.
- 40%
- is the tax on each dollar of taxable estate above the exemption.
- $30M
- is what a married couple can shelter at 2026 amounts, when both spouses’ exemptions are used.
The IRS had not yet published the 2027 estate tax exemption as of September 24, 2026.
Will your estate owe federal estate tax?
Your gross estate is over $15 million
The executor must file Form 706 for a 2026 death when the gross estate is over $15 million. The gross estate is everything you owned worldwide, including real estate, investments and business interests, plus some property you gave away. Tax is due only if the taxable estate, after deductions, is still over the exemption.
Your lifetime gifts count against it
The $15 million is a lifetime exemption, shared by your estate and the taxable gifts you make while alive. In 2026, the first $19,000 you give each person outright is excluded, and gifts to a U.S.-citizen spouse are fully deducted. Other taxable gifts since 1976 are added to your estate when the tax is figured and when deciding if a return is due.
What you leave your spouse is deducted
Property you leave to a U.S.-citizen spouse, outright or in a qualifying trust, is deducted with no limit: the unlimited marital deduction. For a spouse who is not a citizen, the deduction needs a qualified domestic trust (QDOT). The exception is a spouse who becomes a citizen before the return is filed and has lived in the U.S. since the death.
These tests are for U.S. citizens and residents. The estate of a nonresident who is not a U.S. citizen follows other rules, and it cannot elect portability.
What is the 2026 estate tax exemption for a married couple?
A married couple has $30 million of exemptions at 2026 amounts, but the first spouse’s $15 million is easy to waste. Because a bequest to the survivor is deducted, that exemption covers only what passes to others, such as children. Whatever it does not cover is lost unless the executor elects portability.
First death
$0
The $3 million to the children uses $3 million of the exemption, and the $12 million to the survivor is deducted.
Second death, no election
$4,800,000
The survivor dies with $27 million, which is $12 million more than their own exemption.
Second death, with portability
$0
The unused $12 million is added to the survivor’s own $15 million, which covers all $27 million.
Both deaths are figured at 2026 amounts. The unified credit, $5,945,800 for 2026, cancels the tax on the first $15 million, so only the excess is taxed, at 40%. Without the election, 40% of the $12 million excess is $4,800,000. The assets do not grow, both spouses are U.S. citizens and neither made taxable gifts.
What happens to the federal estate tax exemption in 2026?
In 2026 the federal estate tax exemption rose to $15 million, though it was projected to fall to about half its 2025 level. The 2017 Tax Cuts and Jobs Act had doubled it only for 2018 to 2025. Public Law 119-21, signed July 4, 2025, stopped the drop before it took effect.
| Old law | Current law | |
|---|---|---|
| 2026 exemption | About half The $5 million base, plus inflation | $15 million Up from $13.99 million in 2025 |
| End date | December 31, 2025 The doubled amount ran out | None Only a new law can change it |
| Inflation | Yearly, on the lower amount | From 2027 In steps of $10,000 |
| GST exemption | The same lower amount | $15 million Same as the estate tax |
An IRS FAQ page still says the exemption reverts in 2026. The statute and the IRS’s 2026 Form 706 instructions both put the 2026 federal estate tax exemption at $15 million.
Where estate plans still go wrong under the new law.
Portability needs a Form 706 on time
Portability is not automatic: the executor must elect it on a complete Form 706. The return is due 9 months after the death, or 15 months with an extension, even when no tax is owed. An estate that did not have to file can still elect within 5 years, under Rev. Proc. 2022-32.
The ported amount never grows
The unused exemption a survivor receives is fixed at the first death, while the survivor’s own exemption keeps rising with inflation. If the survivor remarries and outlives the new spouse too, that spouse’s unused amount replaces the first.
A rushed gift gives up the step-up in basis
For an estate under the exemption, holding an appreciated asset until death can spare your heirs capital gains tax. Heirs generally take an asset at its value on the day of death, while a gift carries your original cost to the recipient. Advice written before July 2025 often urged gifts to beat a 2026 drop that never came.
Your state may tax a smaller estate
Twelve states and DC have their own estate tax, and most exempt far less than $15 million. Massachusetts exempts $2 million in 2026, Minnesota $3 million and Illinois $4 million. None of the three rises with inflation.
New York’s exemption ends in a cliff
A New York taxable estate over $7,717,500 gets no exemption at all, and the whole estate is taxed. That cliff is 105% of the New York estate tax exemption, which is $7.35 million for 2026. The state has no portability, and for deaths before 2032 it adds back most taxable gifts made within 3 years of death.
Valim’s CPAs plan the tax side of your estate while your attorney drafts the will and trusts.
Valim is a CPA firm, not a law firm, so we work with the estate attorney you already have.
- We prepare your Form 709 when a gift needs one, and track how much of your exemption you have used.
- As part of Tax advisory, we compare giving an asset away now with holding it for the step-up in basis at death.
- We plan estimated payments for grantor trust income taxed on your own return.
- We prepare the income tax returns for your trusts, and for your estate after a death.
- If the IRS or a state writes about a return we prepared, we handle the reply as part of the fee.
- Individual return
- from $195
- Business return
- from $495
We quote a flat fee before work starts. We do not bill hourly.
Estate tax exemption questions.
What is the federal estate tax exemption in 2026?
The federal estate tax exemption in 2026 is $15 million per person. That $15 million is shared with the taxable gifts you make during your life. Each dollar of taxable estate above it is taxed at 40%. A married couple can shelter $30 million when both exemptions are used. Portability carries an unused one to the survivor if the executor elects it on a timely Form 706.
Did the estate tax exemption sunset in 2026?
No, the estate tax exemption did not sunset in 2026. Public Law 119-21 set it at $15 million for deaths and gifts from January 1, 2026. It also deleted the TCJA rule that limited the higher amount to 2018 through 2025, so the drop to about half never happened. The tax code now gives it no end date, though a later Congress could still change it. If the exemption ever falls, a Treasury regulation known as the anti-clawback rule protects gifts already made under the higher amount.
What is portability?
Portability lets a surviving spouse add the deceased spouse’s unused federal exemption to their own. The unused part is called the deceased spousal unused exclusion (DSUE) amount. The executor elects portability on a complete Form 706 filed on time, even when the estate owes no tax. Estates that were not required to file get up to 5 years under Rev. Proc. 2022-32. The amount is fixed at the first death and does not grow with inflation.
How do GRATs and SLATs reduce estate tax?
GRATs and SLATs move the future growth of your assets out of your taxable estate. A grantor retained annuity trust (GRAT) pays you a fixed annuity for a set number of years. If you outlive the term, growth above the IRS Section 7520 rate passes to your heirs free of gift and estate tax. You fund a spousal lifetime access trust (SLAT) with a gift that uses your exemption now, and the trust can still pay your spouse. Both are usually grantor trusts, and assets that have left your estate get no step-up in basis at your death.
How much can I inherit without paying federal taxes?
There is no federal inheritance tax, so you owe none on any amount you inherit. The estate pays any estate tax, and only above its exemption: $15 million for 2026, less taxable gifts made during life. An inheritance is usually not income to you, but money you take out of an inherited traditional IRA or 401(k) is. Pennsylvania, New Jersey, Kentucky, Nebraska and Maryland tax some heirs, though close family pay less or nothing.
Sources
- 26 U.S.C. § 2010, Unified credit against estate tax
- Public Law 119-21 (One Big Beautiful Bill Act), § 70106
- 26 U.S.C. § 2001, Imposition and rate of tax
- IRS, Rev. Proc. 2025-32 (2026 inflation adjustments)
- IRS, Instructions for Form 706 (Rev. July 2026)
- IRS, Estate and gift tax FAQs (not yet updated for P.L. 119-21)
- IRS, Rev. Proc. 2022-32 (late portability election)
- 26 C.F.R. § 20.2010-2, Portability provisions applicable to estate of a decedent survived by a spouse
- 26 U.S.C. § 2056, Bequests to surviving spouse (marital deduction and QDOT)
- 26 U.S.C. § 1014, Basis of property acquired from a decedent
- 26 U.S.C. § 1015, Basis of property acquired by gift
- 26 U.S.C. § 102, Gifts and inheritances
- 26 U.S.C. § 691, Income in respect of decedents
- N.Y. Tax Law § 952, Tax imposed
- New York State Department of Taxation and Finance, Estate tax
- New York State, Instructions for Form ET-706 (9/25)
- Mass. Gen. Laws ch. 65C, § 2A, Transfer of estate and real property; tax
- Minn. Stat. § 291.016, Minnesota taxable estate
- Illinois Attorney General, Estate Tax Instruction Fact Sheet
- Pennsylvania Department of Revenue, Inheritance tax
- New Jersey Division of Taxation, Inheritance tax rates
- Kentucky Department of Revenue, Inheritance and estate tax
- Neb. Rev. Stat. § 77-2004, Inheritance tax rates for immediate relatives
- Md. Code, Tax-General § 7-203, Inheritance tax exemptions
Reviewed and updated September 2026. General information, not advice for your situation.