The 2026 Estate Tax Exemption, Explained
The exemption is $15 million per person in 2026. Here's what that means for federal and state estate tax — and who still needs to plan.
The headline number for 2026
For deaths in 2026, the federal estate and gift tax exemption is $15 million per individual — $30 million for a married couple using portability. Assets passing to heirs above that threshold are taxed at a flat 40% federal rate. This figure was set by the 2025 tax law and is indexed for inflation going forward, removing the 'sunset' cliff that previously loomed.
Because the exemption is so high, the vast majority of estates owe no federal estate tax at all. The planning question for most families isn't 'how much federal tax will I owe' but 'how do I avoid state estate tax and pass assets efficiently.'
State estate taxes are the real trap
Twelve states and the District of Columbia impose their own estate tax, and their exemptions are dramatically lower than the federal one. Massachusetts and Oregon start at just $1–2 million. Washington's top rate reaches 20%. A family with a $4 million estate owes nothing federally but can face a six-figure state estate tax bill.
This is why your state of residence at death matters enormously. The Estate Tax Calculator above lets you pick your state and see the combined federal and state exposure. For residents of high-tax states, relocation, lifetime gifting, and trusts can all reduce the state bill.
Portability: don't waste the first spouse's exemption
When the first spouse dies, any unused federal exemption can be transferred to the survivor by filing a timely estate tax return (Form 706) electing portability. Skip that election and the first spouse's $15 million simply vanishes — a costly mistake for estates that may grow above $15 million later.
Portability applies only to the federal exemption, not state exemptions, and not to the GST exemption. Couples with appreciating assets often combine portability with credit-shelter or SLAT planning to lock in both spouses' exemptions.
What still triggers planning below the exemption
Even under $15 million, several issues drive planning: state estate tax, the desire to protect assets from a beneficiary's creditors or divorce, providing for a special-needs heir, and keeping a family business or farm intact. Trusts solve these problems regardless of whether any tax is due.
Appreciation is the wild card. A $10 million estate growing at 6% doubles in 12 years. Planning today — while the exemption is high and the asset value is lower — locks in gift values before they balloon. SLATs and dynasty trusts are the workhorses here.
Step-up in basis: the other half of the equation
Estate tax isn't the only tax in play. Assets passing at death receive a 'step-up in basis' to fair market value, erasing the capital gains that built up during life. For families below the estate tax threshold, this makes inheriting appreciated assets far better than receiving them as lifetime gifts, which carry the original basis.
The interaction is subtle: lifetime gifting removes future appreciation from your estate but forfeits the step-up; holding until death captures the step-up but keeps the asset in your taxable estate. Our Step-Up in Basis Calculator quantifies that trade-off for a specific asset.
When to bring in a professional
If your estate approaches any exemption — federal or state — or includes a business, real estate in multiple states, or a blended family, professional guidance pays for itself. A fee-only fiduciary advisor or estate attorney can coordinate the will, trusts, beneficiary designations, and tax elections so they pull in the same direction.
Directories such as NAPFA (fee-only advisors) and Paladin Registry can match you with a fiduciary, and tax software like TurboTax Premium handles the income tax side of trust and estate administration.
Read the full guide