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Estate & Gift Tax Exemption 2026: $15M Rules

The 2026 estate and gift tax exemption is $15 million per person under the OBBBA. See the $19,000 gift rule, portability, GST, and what heirs owe.

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This article is for educational purposes only and is not tax, legal, or financial advice. Tax rules change periodically, always check current IRS guidance or consult a qualified tax professional.

The federal estate and gift tax exemption is $15,000,000 per person for 2026, and the One Big Beautiful Bill Act (OBBBA) made it permanent. A married couple can shelter $30,000,000, but only if someone files the right paperwork after the first spouse dies.

Odds are you won’t owe any of it. By our math from IRS and CDC data, fewer than 1 in 1,000 deaths leads to a federal estate tax bill.

The tax most families do run into shows up later, on the heir’s own income tax return. We cover both sides below.

The 2026 Estate and Gift Tax Numbers (and What OBBBA Changed)

The 2026 figures come from IRS Revenue Procedure 2025-32 and the tax code as amended by P.L. 119-21.

2026 federal estate, gift, and GST tax figures compared with 2025
Item20252026
Basic exclusion amount (lifetime estate and gift exemption), per person$13,990,000$15,000,000
Married couple, with portability$27,980,000$30,000,000
Annual gift exclusion, per recipient$19,000$19,000
Annual exclusion with gift splitting (married couple)$38,000$38,000
Annual exclusion for gifts to a non-citizen spouse$190,000$194,000
Generation-skipping transfer (GST) exemption$13,990,000$15,000,000
Top estate, gift, and GST tax rate40%40%

What the One Big Beautiful Bill Act changed

The Tax Cuts and Jobs Act (TCJA) doubled the exemption starting in 2018, but only temporarily. After 2025, the exemption was scheduled to fall back to what the IRS called “its pre-2018 level of $5 million, as adjusted for inflation.” That would have cut it roughly in half.

The One Big Beautiful Bill Act (P.L. 119-21, section 70106) replaced that plan. It:

  • set the basic exclusion amount at $15,000,000 for people who die, and gifts made, after December 31, 2025
  • struck the TCJA sunset language from the tax code
  • restarted inflation indexing with 2025 as the base year, with the first adjustment in 2027 and each new figure rounded to the nearest $10,000

On some IRS pages you’ll see the same law called the Working Families Tax Cuts bill. It’s the same statute, P.L. 119-21. For everything else the law changed, see our OBBBA deductions guide.

How permanent is “permanent”?

Permanent means the statute no longer has an end date. That’s a real change from the TCJA version. It doesn’t stop a future Congress from changing the number, the same way this one did.

The 2027 figure hasn’t been announced. The IRS will publish it in its annual inflation revenue procedure, which usually comes out in October or November.

Lifetime Exemption vs. the $19,000 Annual Gift Exclusion

These are two separate limits, and people mix them up constantly.

The lifetime exemption is the $15,000,000 figure. It’s one unified amount that covers taxable gifts you make while you’re alive and your estate when you die. Any of it you use on gifts now is no longer available to your estate later.

The annual exclusion is $19,000 per recipient for 2026. Outright gifts at or under that amount to any one person don’t need a return and don’t touch your lifetime exemption. You can give $19,000 to as many different people as you like.

Going over $19,000 means a form, not a tax

Give one person more than $19,000 in a year and you file Form 709, the gift tax return, by April 15 of the year after the gift. The excess is subtracted from your lifetime exemption. Actual gift tax only comes due once your total lifetime taxable gifts pass $15,000,000.

Example: You give your daughter $50,000 toward a house down payment in 2026.

  • The first $19,000 is covered by the annual exclusion.
  • The other $31,000 is a taxable gift, which you report on Form 709.
  • Your remaining lifetime exemption drops to $14,969,000.
  • Gift tax owed: $0.

Your daughter reports nothing. Gift tax is the donor’s responsibility, and a gift is not income to the person who receives it.

Gift splitting for married couples

Married couples can elect to treat a gift from either spouse as made half by each. That doubles the annual exclusion to $38,000 per recipient. Electing gift splitting does require a Form 709, though, even when no tax is due.

Gifts that don’t count against either limit

  • Tuition paid directly to the school. There’s no dollar cap, as long as the payment goes straight to the institution. It covers tuition itself, not room and board or books.
  • Medical bills paid directly to the provider. Pay the hospital or doctor, not the patient.
  • Gifts to a spouse who is a US citizen. Unlimited.
  • Gifts to charity.

Gifts to a spouse who is not a US citizen follow a different rule. They get their own annual exclusion of $194,000 for 2026, up from $190,000 in 2025.

Front-loading a 529 plan

A 529 contribution is a gift to the beneficiary. A special election lets you make one large contribution and treat it as spread evenly over five years, which uses up to five years of annual exclusions at once. You make the election on Form 709, and any other gifts to that beneficiary during those five years count on top of it.

The 529 plan tax savings calculator shows what the account itself can save.

To see whether a gift needs Form 709 or dips into your lifetime exemption, run it through the gift tax calculator.

Who Actually Owes Estate Tax (Almost Nobody)

IRS Statistics of Income data shows just 2,663 taxable estate tax returns filed in 2024, owing about $23.3 billion in net estate tax combined. Most of those returns were for 2023 deaths, when the exemption was still only $12,920,000.

The CDC counted 3,090,964 deaths in the US in 2023. Divide one number by the other and roughly 0.09% of deaths, or fewer than 1 in 1,000, produced an estate that owed federal estate tax.

How the tax is figured

The estate tax return, Form 706, works it out in five steps:

  1. Start with the gross estate: everything the person owned at death, including real estate, investments, retirement accounts, and business interests.
  2. Subtract debts and expenses, everything left to a surviving spouse (the marital deduction), and bequests to charity. The result is the taxable estate.
  3. Add back lifetime taxable gifts, the amounts above the annual exclusions.
  4. Apply the unified rate schedule, which runs from 18% to 40%.
  5. Subtract the applicable credit, which cancels the tax on the first $15,000,000.

Example: A single person dies in 2026 with a $20,000,000 taxable estate and no lifetime taxable gifts.

  • Tentative tax: $345,800 + 40% of ($20,000,000 - $1,000,000) = $7,945,800
  • Credit on the $15,000,000 exclusion (the IRS “basic credit amount”): $5,945,800
  • Estate tax owed: $2,000,000

That’s exactly 40% of the $5,000,000 above the exemption. Once an estate crosses the line, each additional dollar is taxed at 40%.

The estate pays this tax before anything is distributed. The heirs don’t pay it, and there is no federal inheritance tax. For a quick estimate on your own numbers, try the estate tax calculator.

Your state may set a much lower bar

According to the Tax Foundation’s October 2025 state map, 12 states plus the District of Columbia levy an estate tax and 5 states levy an inheritance tax, with Maryland levying both. Iowa repealed its inheritance tax effective January 1, 2025.

Several state estate tax thresholds sit far below $15,000,000. Check your state’s current rules before assuming you’re in the clear.

Portability: How Married Couples Reach $30 Million

Portability lets a surviving spouse add the first spouse’s unused exclusion to their own. The IRS calls that leftover amount the deceased spousal unused exclusion, or DSUE.

It is not automatic

To claim it, the executor of the first spouse’s estate must file Form 706 and elect portability, even if the estate owes nothing and is nowhere near the filing threshold. The return is due 9 months after death, or 15 months with the automatic 6-month extension on Form 4768.

Plenty of families skip this step because there’s no estate tax to pay. That gets expensive if the survivor lives for decades and their assets keep growing.

Missed the deadline? There’s a five-year fix

Rev. Proc. 2022-32 offers a simplified late election up to the fifth anniversary of the first spouse’s death. It’s only available when the estate wasn’t otherwise required to file Form 706, and the person who died was a US citizen or resident.

The late return needs this statement at the top: “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).” After five years, you’re left asking the IRS for a private letter ruling, which is slower and far more expensive.

The fine print on portability

  • The DSUE amount is locked in at the first death. It’s based on the exclusion in effect the year the first spouse died. The survivor’s own exclusion keeps rising with inflation, but the DSUE does not.
  • Only the most recent spouse counts. If the survivor remarries and outlives a second spouse, the DSUE available comes from that last deceased spouse, not the first one.
  • The GST exemption doesn’t carry over. More on that in the next section.

Example: The first spouse dies in 2026 and leaves $4,000,000 to the children and everything else to the surviving spouse. The marital deduction means no estate tax is due. The unused exclusion is $15,000,000 - $4,000,000 = $11,000,000.

With portability elected, the survivor’s exclusion becomes their own $15,000,000 (indexed for inflation from 2027 on) plus the $11,000,000 DSUE, for a total of $26,000,000.

The Generation-Skipping Transfer Tax in Plain English

The generation-skipping transfer (GST) tax is a separate tax that sits on top of the estate and gift tax. It applies to transfers that skip a generation, such as gifts or bequests to grandchildren or to trusts set up for them. Without it, a family could avoid a full layer of estate tax by leaving money straight to the grandkids.

  • 2026 exemption: $15,000,000 per person. By law it equals the basic exclusion amount.
  • Rate: the top estate tax rate of 40%, multiplied by the transfer’s inclusion ratio (roughly, the share not covered by allocated GST exemption).
  • Not portable. The GST exemption is tied to the basic exclusion amount, while the DSUE only adds to the broader applicable exclusion amount. GST exemption that isn’t allocated to the first spouse’s transfers, during life or on their estate tax return, is lost.
  • Allocations are permanent. Once you allocate GST exemption to a transfer or trust, you can’t take it back.

If grandchildren or long-term family trusts are part of the plan, this is estate attorney territory.

What Heirs Actually Pay: The Income-Tax Side

For almost everyone reading this, the estate tax will be $0. The tax that can reach you comes after you inherit.

An inheritance isn’t income

Money or property you inherit is not taxable income to you, and neither is a gift (see our guide to income you can receive tax-free). What you do with it afterward is a different story.

The step-up in basis

Inherited property generally takes a tax basis equal to its fair market value on the date of death (or on the alternate valuation date, if the executor elects it). Growth during the original owner’s lifetime is never taxed.

Example: Your mother bought stock for $40,000. It’s worth $250,000 when she dies, and you sell it a few months later for $255,000.

  • Your basis: $250,000, not $40,000
  • Taxable gain: $5,000, not $215,000
  • Holding period: automatically long-term, even though you sold within a year

A single heir whose 2026 taxable income, including that gain, stays at or below $49,450 would owe 0% federal tax on it. Our capital gains tax rates guide covers the full 2026 thresholds, and the capital gains tax calculator runs the math on any sale.

Gifts made during life don’t step up

Property you receive as a gift while the giver is alive keeps the giver’s basis. This is called carryover basis.

If your mother had given you that same stock before she died, your basis would be $40,000, and selling at $255,000 would produce a $215,000 gain. If that gain were all taxed at the 15% long-term rate, the bill would be $32,250.

That’s the central trade-off between giving appreciated assets now and leaving them at death. (A different rule applies if the asset was worth less than the giver’s basis when you got it.) The cost basis calculator helps you pin down your basis.

A few exceptions

  • The one-year boomerang rule. If you give appreciated property to someone who dies within a year and it passes back to you or your spouse, there’s no step-up.
  • Community property. In community property states, the surviving spouse’s half of community property generally steps up too, not just the half that belonged to the spouse who died.
  • Consistent basis. If the estate had to file Form 706, you may be required to use the value the estate reported to you on Schedule A of Form 8971.

Inherited IRAs and 401(k)s don’t step up

Traditional retirement accounts are “income in respect of a decedent.” Withdrawals are generally ordinary income, taxed at your regular bracket, and most non-spouse beneficiaries have to empty the account within 10 years. Our inherited IRA 10-year rule guide covers the deadlines, and the inherited IRA RMD calculator estimates your required withdrawals.

In the rare case where the estate did pay federal estate tax, you may be able to claim an itemized deduction for the estate tax tied to that IRA income.

Income after the inheritance is yours

Dividends and interest earned on an inherited account after the date of death belong on your own return. So does rent from an inherited property.

Tax47 estimates your 2026 federal refund or balance due from the forms you receive. Figure the gain on inherited shares from the stepped-up basis, then enter the sale on a 1099-B. Add dividends and interest on 1099-DIV and 1099-INT forms, or rent from an inherited house on the Rental (Schedule E) form, and watch the estimate move.

It runs on your device, and you don’t need an account. A large gain can also bring in the 3.8% net investment income tax, which the NIIT calculator can check.

If your estate might realistically approach $15,000,000, or you’re planning large gifts, trusts, or transfers to grandchildren, work with an estate attorney or CPA. For everyone else, the numbers worth watching are on your Form 1040, and our free tax calculators can help with those.

Sources & References

This article is for educational purposes only and is not tax, legal, or financial advice. Tax rules change periodically, always check current IRS guidance or consult a qualified tax professional.

Frequently Asked Questions

What is the estate and gift tax exemption for 2026?

It is $15,000,000 per person, or $30,000,000 for a married couple that uses portability. The One Big Beautiful Bill Act (P.L. 119-21) set that amount permanently for deaths and gifts after December 31, 2025, and it will be indexed for inflation starting in 2027.

Is the $15 million exemption really permanent?

It has no expiration date in the statute, unlike the TCJA version that was scheduled to sunset after 2025. It stays in place unless Congress changes it. Starting in 2027 it rises with inflation, using 2025 as the base year and rounding to the nearest $10,000.

How much can I give someone in 2026 without paying gift tax?

You can give up to $19,000 per recipient in outright gifts with no gift tax return. A married couple can give $38,000 per recipient, either with each spouse giving $19,000 or by electing gift splitting, which requires Form 709. Above that you file Form 709, but you owe gift tax only after your lifetime taxable gifts pass $15,000,000.

Do I have to pay tax on money or property I inherit?

There is no federal inheritance tax, and an inheritance is not income to you. You may owe income tax later: capital gains tax if you sell an asset for more than its stepped-up basis, and ordinary income tax on withdrawals from an inherited traditional IRA. A handful of states also have their own inheritance tax.

What is portability, and do we have to file anything?

Portability lets a surviving spouse use the first spouse's unused exclusion. The executor must file Form 706 and elect it, even when no tax is owed. The return is due 9 months after death, or 15 months with the automatic extension. Estates that were not otherwise required to file can use the Rev. Proc. 2022-32 relief for up to 5 years after the death.

What is the generation-skipping transfer tax exemption for 2026?

The GST exemption is $15,000,000 for 2026. The GST tax applies at 40% to transfers to grandchildren, or to others two or more generations younger, that are not covered by the exemption. Unlike the estate tax exclusion, the GST exemption is not portable between spouses.

What is the estate tax rate in 2026?

The unified rate schedule runs from 18% to 40%. Because the exclusion is far above the $1,000,000 point where the 40% rate starts, every taxable dollar above the exclusion is effectively taxed at 40%.

What is the gift limit for a spouse who isn't a US citizen?

The annual exclusion for gifts to a spouse who is not a US citizen is $194,000 for 2026, up from $190,000 in 2025. Gifts to a spouse who is a US citizen are unlimited.