The 2026 Estate Tax Exemption: $15 Million Per Person, and No More Sunset

What changed, and the sunset that didn’t happen

Under the 2017 tax law, the exemption was scheduled to fall by roughly half at the start of 2026, to about $7 million per person. Many families made large gifts in 2024 and 2025 to use the higher amount before it disappeared.

The 2025 tax law replaced that sunset. Starting January 1, 2026, the exemption is $15 million per person, it is indexed for inflation in later years, and there is no expiration date. It can still be changed by a future Congress, but nothing in current law reduces it.

The 2027 amount will be slightly higher once the IRS publishes its annual inflation adjustment, which it typically does in the fall.

How the exemption works

• One exemption for gifts and estates. Taxable gifts you make during life, the amounts above the annual exclusion, use up the same $15 million. What is left at death shelters your estate. See the gift tax guide.
• Tax applies only above it. Estate tax is owed on the taxable estate above the remaining exemption, at a top rate of 40%.
• Spouses and charities come off the top. Property left to a U.S. citizen spouse in a qualifying form, or to charity, is generally deductible, so most first deaths in a marriage owe no estate tax at all.
• The GST exemption is separate. Transfers to grandchildren, or to trusts for them, use a separate $15 million generation-skipping exemption, which should be allocated deliberately, because the automatic allocation rules don’t always produce the right result.

Portability: why married couples should still file

When the first spouse dies, any exemption they did not use can pass to the survivor. This is called portability, and it lets a couple shelter up to $30 million. It is not automatic: the executor must file a federal estate tax return (Form 706) to elect it, even when no tax is owed. Estates that were not otherwise required to file can generally make the election up to five years after death.

Two limits are worth knowing. The unused amount that passes to the survivor is fixed at the first death and does not grow with inflation, and the GST exemption does not port at all.

A worked example

A married Chester County couple has a $24 million estate. When the first spouse dies, everything passes to the survivor, so no estate tax is due. When the survivor later dies, the estate passes to their children.

Filing one estate tax return at the first death, with no tax due, saves about $3.2 million at the second. The federal figure is 40% of the $24 million estate above the $15 million exemption, after deducting the Pennsylvania inheritance tax, which the federal return allows. Pennsylvania’s 4.5% inheritance tax on transfers to children applies either way; transfers to the surviving spouse are taxed at 0%.

Hypothetical and simplified for illustration; assumes no prior taxable gifts, no change in value, U.S. citizen spouses, and that all assets are subject to Pennsylvania inheritance tax, before the 5% discount for paying within three months. Actual results depend on your facts.

Who still needs estate tax planning

• Estates above, or growing toward, $15 million or $30 million. A business or real estate portfolio that compounds for 20 years can cross the line even if it is under it today. Our estate tax estimator projects your exposure.
• Families in states with their own estate tax. Some states, including New York, Massachusetts, and Maryland, tax estates far below the federal exemption. Owning real estate in one of them can create a state filing even for a Pennsylvania resident.
• Everyone, for income tax. With no federal estate tax to plan around, the bigger lever for most families is the step-up in basis: holding low-basis assets until death can erase capital gains that a lifetime gift would carry over.

Frequently asked questions