The 2026 Estate Tax Exemption Is $15 Million, and It's Permanent Now.

A couple who spent the last few years watching the calendar can finally stop. The estate planning world had circled the end of 2025, when the temporary doubling of the estate tax exemption was set to expire and drop the shelter from roughly $14 million a person to about $7 million. That cliff is gone. The 2026 estate tax exemption is $15 million per person, and the One Big Beautiful Bill Act made it permanent, with no sunset written into the law. For most families the practical answer is simple: no federal estate tax. The harder question is what to do with an exemption that large and stable.

Under the 2017 Tax Cuts and Jobs Act, the exemption was temporarily doubled, and that doubling was written to expire at the end of 2025. Absent new law, the 2026 number would have reverted to the old $5 million base, indexed for inflation, landing somewhere near $7 million a person. Instead, OBBBA raised the basic exclusion amount to $15 million for 2026, up from $13.99 million in 2025, and struck the sunset. The generation-skipping transfer tax exemption, which applies to gifts and bequests that skip a generation to grandchildren or trusts, tracks the same $15 million. The top transfer tax rate is unchanged at 40%.

A married couple gets two exemptions, $30 million combined in 2026. That result is not automatic. Portability (the rule that lets a surviving spouse inherit the deceased spouse's unused exemption, called the DSUE amount) requires the executor to make an election on a timely filed Form 706 estate tax return, even when no tax is due. Skip the return and the first spouse's exemption can be lost. This is the single most common and most expensive oversight I see: a surviving spouse who never filed the 706, then faces a taxable estate years later that a simple election would have covered.

Here is the trade-off the headline number hides. Assets you hold until death get a step-up in basis to fair market value, which wipes out the built-in capital gain. Assets you give away during life carry your original basis to the recipient. With a $15 million exemption, most families will never owe estate tax, so the old rush to gift appreciated assets out of the estate can backfire: you give away a low-basis asset to save an estate tax you were never going to pay, and the recipient inherits a capital gains bill instead. For most people under the exemption, holding for the step-up now beats lifetime gifting. That is the same logic behind the buy, borrow, die approach to appreciated stock.

Two moves make sense for almost everyone. First, the annual gift tax exclusion (the amount you can give any number of people each year with no gift tax and no use of your lifetime exemption) is $19,000 per recipient in 2026, or $38,000 from a married couple who split gifts. That is a clean way to move money to children and grandchildren without touching the $15 million. Second, if your documents were drafted for the old sunset, have them reread. Formula clauses written to fund the maximum exemption amount into a bypass trust can now shift far more than intended into a trust the surviving spouse cannot fully control, because the formula fills to $15 million instead of $7 million. The exemption got simpler; some old wills got more dangerous.

The $15 million figure is federal. A dozen or so states and the District of Columbia levy their own estate tax, and a few more charge an inheritance tax, most with far lower exemptions and none tied to the federal number. Massachusetts starts its estate tax at $2 million and Oregon at just $1 million, so a family nowhere near the federal exemption can still owe six figures to a state. Worse, these states generally do not allow portability, so each spouse has to use their own exemption or lose it. If you live in or own property in an estate-tax state, the moves that stopped mattering federally, a credit shelter trust, lifetime gifts, even where you retire, can still matter a great deal at the state level.