For years estate planners circled the end of 2025, worried the doubled exemption would fall back toward $7 million. It did not. The One Big Beautiful Bill (OBBBA), signed July 4, 2025, made the higher exemption permanent and raised it — and that removes the deadline-driven panic that had driven a lot of planning for a decade. (Internal Revenue Service)
The 2026 numbers
- Federal lifetime estate and gift exemption: $15,000,000 per person
- Married couples: up to $30,000,000 with proper portability
- Top federal estate, gift, and GST tax rate: 40% on amounts above the exemption
- Generation-skipping transfer (GST) exemption: also $15,000,000
The exemption is indexed for inflation starting in 2027, using 2025 as the base year. So the $15 million figure is the 2026 floor, and it should drift upward from there rather than lapsing back down. (Internal Revenue Service)
"Permanent" still has an asterisk
Permanent means there is no scheduled sunset under current law. It does not mean a future Congress cannot change it. Any long-term plan should assume today's rules but keep flexibility — trusts that are easy to amend, and document choices that do not lock you into a single outcome if the law shifts again. The estate world has seen enough retroactive-ish drama that "permanent" is a planning assumption, not a guarantee. (Nelson Mullins)
Portability requires action, not hope
A surviving spouse can use a deceased spouse's unused exemption — but only if a timely estate tax return (Form 706) is filed to elect portability. It is not automatic, and the executor has to actually do it. Two limits matter: portability does not transfer the unused GST exemption, and a late election can be costly to fix. Married couples who skip the return because "we are under $15 million each" can lose the second exemption permanently. (Nelson Mullins)
The exemption is measured against the gross estate
The exemption applies to the gross estate — total fair market value of everything owned at death, before debts. Several deductions then shrink the taxable estate: outstanding mortgages and debts, funeral and administrative expenses, charitable bequests, and the marital deduction for assets passing to a surviving spouse. For a couple using portability, the surviving spouse can apply the deceased spouse's unused exclusion (DSUE) on top of their own $15 million. (Nelson Mullins)
Lifetime gifts eat into the exemption
Every lifetime gift above the annual exclusion reduces the remaining lifetime exemption. Give $5 million in excess gifts during life, then die with a $20 million estate, and the exemption left at death is $10 million, not $15 million — because the gifts already consumed $5 million. This is why coordinated gifting and estate planning are the same conversation, not two. (Nelson Mullins)
State death taxes are a separate fight
OBBBA changed only federal law. About 17 states and DC still levy their own estate or inheritance taxes, often with exemptions far below $15 million — Massachusetts and Oregon, for example, start around $1 million. A family that owes nothing federally can still owe a state bill on a modest estate. That gap is exactly where a lot of people get surprised, because they assume the federal number protects them. (Internal Revenue Service)
Numbers: a $20 million couple
A married couple with a $20 million estate and clean portability planning owes $0 in federal estate tax. Before OBBBA, had the exemption reverted to about $7 million, the same couple could have faced several million in federal tax. Liquidity still matters regardless of the exemption: estates built from a business, farm, or real estate owe tax in cash, often within nine months. Life insurance inside an irrevocable trust and buy-sell agreements are the common ways to fund that bill. (Internal Revenue Service)
If your estate touches either the federal or a state threshold, the estate tax calculator will show the exposure under the 2026 exemption and flag where portability or state law changes the result. (Nelson Mullins)
The portability election
A key detail that many estate plans miss: the unused portion of the exemption, called the deceased spouse's unused exclusion amount, can be carried over to the surviving spouse through a portability election. If a couple is married and one spouse dies without using the full exemption, the survivor can elect to carry over the unused amount, effectively doubling the available exemption over their lifetime. The election must be made on a timely-filed estate tax return, which means even a small estate that does not otherwise owe tax must file a return to claim portability. Missing the deadline can cost the survivor a large portion of their available exemption. (Nelson Mullins)
What happens at the sunset
The estate and gift exemption, set well above historical levels by the 2017 tax law, is scheduled to sunset at the end of 2025 unless Congress acts. At the sunset, the exemption drops back to a higher version of the pre-2017 level, roughly half the current value in inflation-adjusted terms. For a family with a net estate above the post-sunset threshold, this can be a dramatic swing: the same estate that is tax-free today could owe a meaningful amount of tax if the sunset takes effect. (Nelson Mullins)
For anyone with a substantial estate, the practical move is to model both scenarios, with and without the sunset, and to identify which planning tools work best under the lower threshold. Lifetime gifting, use of the annual exclusion, and step-up in basis planning all become more important as the exemption shrinks. The step-up in basis at death, which resets the cost basis of appreciated assets, is a particular consideration, because a smaller exemption means more of the estate is subject to the estate tax, which in turn means the step-up is applied to a smaller portion of the assets. (Nelson Mullins)
The interaction between gifting and the exemption
The annual gift exclusion and the lifetime exemption share the same dollar pool. Every dollar of lifetime gift above the annual exclusion reduces the available exemption, so a family that gives large gifts over the years is, in effect, spending down the estate tax exemption that would otherwise be available at death. For most families, this is not a problem, because the exemption is large enough that reasonable gifting does not exhaust it. For larger estates, the math matters: the value of a gift today is the gift's fair market value plus the growth on that gift that would have been part of the estate, against the cost of using exemption that could have sheltered a different asset. The right answer depends on growth rates, which is why a gifting plan is a model, not a rule. (Nelson Mullins)
Disclaimer: This article is general educational information, not tax, legal, or investment advice. Dollar amounts come from the 2026 sources listed at the end of this article and may change. Before you act, talk to a licensed CPA, EA, or tax attorney about your own situation.