What changed and when
The Tax Cuts and Jobs Act of 2017 temporarily doubled the federal estate and gift tax exemption. That increase was scheduled to expire at the end of 2025, which would have cut the exemption roughly in half — from about $14 million back to around $7 million per person.
The One Big Beautiful Bill Act, signed on July 4, 2025, made the higher exemption permanent and increased it further to $15 million per individual. The exemption is also indexed for inflation after 2026, so it will continue to grow over time. For married couples, portability rules allow a surviving spouse to use any unused portion of the deceased spouse's exemption, effectively providing up to $30 million in combined protection.
The federal estate tax rate above the exemption remains 40%. The change is not about eliminating the estate tax — it is about raising the threshold at which it applies.
Who this actually affects
The vast majority of Americans will never owe federal estate tax under the new rules. With a $15 million exemption per person, only estates valued above that threshold face federal estate tax liability. According to IRS data, fewer than 0.1% of estates owe any federal estate tax in a given year.
However, the change matters most to people who were previously caught in the gap — those with estates between $7 million and $15 million who had been doing planning specifically to avoid the post-sunset cliff. For those families, the urgency of certain planning strategies has changed.
It is also worth noting that state estate taxes are separate. About 12 states — including Massachusetts, Oregon, and Washington — have their own estate taxes with much lower exemptions, sometimes as low as $1 million. The federal change does not affect state-level exposure.
The annual gift tax exclusion in 2026
Separate from the lifetime exemption, the annual gift tax exclusion allows you to give any number of people up to $19,000 each in 2026 without using any of your lifetime exemption. For a married couple, that is $38,000 per recipient per year through gift-splitting.
Annual gifts do not reduce your $15 million lifetime exemption. They are a separate, inflation-adjusted limit that resets each year. For families with significant assets, consistent annual gifting is one of the simplest ways to transfer wealth over time without any tax consequence.
How RoboTax helps you prepare
Estate planning involves more than just knowing the exemption amount. It requires understanding what you own, how it is titled, and whether your current plan still makes sense under the new rules. RoboTax connects to your financial accounts and can help surface the full picture of your assets — bank accounts, investment accounts, and other financial holdings — so a tax professional or estate planning attorney has a clearer starting point.
If you have an existing estate plan that was built around the old $7 million sunset scenario, it may be worth reviewing whether certain strategies — like irrevocable trusts designed to remove assets from your estate — still make sense at the new $15 million threshold.
Frequently asked questions
What is the federal estate tax exemption in 2026?
$15 million per individual, or $30 million for married couples using portability. The One Big Beautiful Bill Act made this amount permanent and indexed it for inflation after 2026.
Did the estate tax exemption sunset happen?
No. The TCJA sunset that would have reduced the exemption to roughly $7 million was prevented by the One Big Beautiful Bill Act, which instead permanently raised the exemption to $15 million.
Do I still owe state estate taxes?
Possibly. About 12 states have their own estate taxes with separate, lower exemptions — sometimes as low as $1 million. The federal change does not affect state-level estate tax exposure.
What is the annual gift tax exclusion in 2026?
$19,000 per recipient in 2026. Married couples can give $38,000 per recipient per year through gift-splitting. Annual gifts do not reduce your $15 million lifetime exemption.
Sources and further reading
These resources are included for educational context. RoboTax is not tax, legal, or financial advice, and this content should be reviewed with a qualified tax professional before being used for filing decisions.