If you have been putting off estate planning because the rules kept changing, 2026 is finally a year with some good news. The One, Big, Beautiful Bill (OBBBA) permanently raised the federal estate and gift tax exemption, and the IRS just confirmed the official 2026 numbers. Here is what the new $15 million exemption actually means for you, your family, and your state.

What Is the Federal Estate Tax Exemption?

The federal estate tax exemption (also called the “basic exclusion amount”) is the value of assets a person can pass on at death — through a will, trust, or other transfer — before the federal government takes a cut. If the total value of your estate falls below this number, your heirs owe no federal estate tax at all.

In practice, this means the federal estate tax only ever touches a tiny slice of American households. According to IRS data, well under 1% of estates owe any federal estate tax in a given year, simply because most people’s homes, savings, and retirement accounts do not come close to the exemption threshold.

It is important not to confuse this with state estate or inheritance taxes, which are a separate system with their own, usually much lower, thresholds. More on that below.

The New 2026 Numbers

For deaths occurring in 2026, the IRS has set the basic exclusion amount at $15,000,000 per individual (Rev. Proc. 2025-32). For a married couple who takes advantage of portability (explained below), that effectively doubles to $30,000,000.

This is a bigger jump than a typical annual inflation adjustment. The 2025 exemption was $13.99 million per person. Part of the 2026 increase is standard cost-of-living indexing, but the larger driver is the OBBBA, which reset and permanently raised the base exemption amount starting in 2026 — removing the scheduled “sunset” that would have cut the exemption roughly in half at the end of 2025 under prior law.

Annual Gift Tax Exclusion vs. Lifetime Exemption

These are two different tools, and mixing them up is one of the most common estate-planning mistakes.

• Annual gift tax exclusion (2026): $19,000 per recipient, per year. You can give this amount to as many people as you want, every year, with zero paperwork and zero effect on your lifetime exemption.
• Lifetime gift and estate tax exemption: $15,000,000. This is a single, shared bucket that covers both gifts you make during your lifetime above the annual exclusion and the value of your estate when you pass away.

In other words, if you give a family member more than $19,000 in a single year, you do not automatically owe gift tax — you simply use up part of your $15 million lifetime exemption, tracked on IRS Form 709.

A Simple Example

Say you give your daughter $100,000 this year to help with a down payment. Here is how the math works:

1. Annual exclusion covers the first $19,000 — no reporting needed.
2. The remaining $81,000 ($100,000 − $19,000) counts against your lifetime exemption.
3. You file Form 709 to report the $81,000, but you owe no gift tax out of pocket.
4. Your remaining lifetime exemption drops from $15,000,000 to $14,919,000.

Unless your total lifetime gifts plus your estate at death eventually exceed $15 million, you will never actually pay federal gift or estate tax on that transfer — you are just keeping a running tally.

What “Portability” Means for Married Couples

Portability lets a surviving spouse use any unused exemption from a deceased spouse, known as the Deceased Spousal Unused Exclusion (DSUE). If one spouse dies in 2026 having used none of their $15 million exemption, the surviving spouse could potentially shelter up to $30 million combined.

The catch: portability is not automatic. The executor of the deceased spouse’s estate must file a federal estate tax return (Form 706) within the required deadline — even if the estate is well under the exemption and would not otherwise need to file — specifically to elect portability. Many families lose this benefit simply because no one filed the form in time.

Does Your State Also Tax Your Estate?

The federal exemption is generous, but roughly a dozen states (plus the District of Columbia) impose their own estate or inheritance tax with exemption amounts far below $15 million. This is the piece people most often overlook.

State	Tax Type	Approximate 2026 Exemption
Massachusetts	Estate tax	$2,000,000
Oregon	Estate tax	$1,000,000
New York	Estate tax	Around $7,000,000 (cliff applies above threshold)
Washington	Estate tax	Around $3,000,000+
Maryland	Estate + inheritance tax	$5,000,000
Federal (all states)	Estate tax	$15,000,000

These state figures are approximate and adjust periodically, so always confirm the current threshold with your state’s department of revenue. The key takeaway: an estate that owes zero federal tax can still owe state estate tax if you live in (or own property in) one of these states.

Who Should Actually Pay Attention to This

For the vast majority of people, the federal $15 million exemption means estate tax simply is not a concern. But it is still worth a closer look if any of the following apply to you:

• You own a business or a large real estate portfolio whose combined value could approach the exemption threshold.
• You hold significant life insurance policies (the death benefit counts toward your taxable estate unless structured properly).
• You have already made large lifetime gifts and are unsure how much lifetime exemption you have left.
• You live in, or own property in, a state with its own lower estate tax threshold.
• You are part of a married couple and want to make sure portability is elected correctly.

7 Things to Know (Quick Recap)

1. The 2026 federal estate and gift tax exemption is $15,000,000 per individual, or $30,000,000 for married couples using portability.
2. This is a permanent increase from the OBBBA, not just a routine inflation adjustment — up from $13.99 million in 2025.
3. The annual gift tax exclusion for 2026 is $19,000 per recipient and does not count against your lifetime exemption.
4. Gifts above the annual exclusion reduce your lifetime exemption but rarely trigger actual gift tax owed.
5. Portability requires filing Form 706 — it is not automatic, even for estates that don’t need to file otherwise.
6. Some states impose their own estate tax with exemptions as low as $1–2 million, regardless of the federal limit.
7. Fewer than 1% of estates owe any federal estate tax, but business owners, large real estate holders, and life insurance policyholders should still plan ahead.

FAQ

Is the $15 million exemption permanent?

Yes — unlike the prior law, which was scheduled to cut the exemption roughly in half after 2025, the OBBBA made the higher exemption a permanent feature of the tax code starting in 2026, with the amount continuing to adjust for inflation each year going forward.

Do I need to file anything if my estate is under the limit?

Generally no federal estate tax return is required if the estate is below the exemption — with one major exception: a surviving spouse who wants to claim portability of the deceased spouse’s unused exemption must still file Form 706 by the deadline, even if no tax is owed.

What happens to gifts made before 2026?

Gifts you made in prior years under lower exemption amounts still count against your lifetime total, but the IRS has confirmed there is no “clawback” — using your exemption when it was lower does not penalize you now that the exemption has increased. Your available lifetime exemption simply reflects the higher 2026 figure minus whatever you have already used.