2026 Estate Tax Exemption: What Changed and What to Do Now

For the past several years, estate planners and wealthy families have been watching the calendar with a mixture of anxiety and urgency. The Tax Cuts and Jobs Act of 2017 dramatically raised the federal estate tax exemption — but came with an expiration date. When Congress didn't act, the exemption was set to be cut roughly in half at the start of 2026. Then, in July 2025, the One Big Beautiful Bill Act changed the picture entirely. Here's what actually happened, what the 2026 numbers look like, and — more importantly — what you should do about it now.

What Actually Happened

Let's start with a quick history, because the path to where we are today matters for understanding why so many plans were made — and may now need revisiting.

Before 2018, the federal estate and gift tax exemption sat at around $5.5 million per individual. The Tax Cuts and Jobs Act (TCJA) nearly doubled it overnight, raising the exemption to $11.18 million for 2018, indexed to inflation. By 2025, that figure had climbed to roughly $13.6 million per person — or $27.2 million for a married couple using portability.

The catch: the TCJA contained a built-in sunset provision. Without new legislation, the higher exemption would expire at midnight on December 31, 2025, and revert to the pre-2018 level — estimated to land around $7 million per person once adjusted for inflation. That reversion would have been the single largest overnight reduction in the estate tax exemption in modern history, and it sent estate planners scrambling to help clients use their exemption before it disappeared.

Congress resolved the uncertainty with the One Big Beautiful Bill Act (OBBBA), signed into law in July 2025. The OBBBA made the higher exemption permanent — eliminating the sunset entirely — and raised the 2026 exemption to $15 million per individual. For married couples using the portability election, that's $30 million combined. Starting in 2027, the exemption will be indexed for inflation, so it will continue to grow over time. You can explore the full landscape of federal and state estate tax planning strategies in our comprehensive guide.

What This Means for You

The honest answer for most American families: the federal estate tax is now largely irrelevant to your situation. At $15 million per person, only a small fraction of estates will ever owe federal estate tax — and with inflation indexing after 2027, that threshold keeps rising.

But "largely irrelevant at the federal level" is not the same as "no planning needed." Two things are worth keeping front of mind.

First, state estate taxes are a different story. A significant number of states impose their own estate taxes — at much lower thresholds. If you live in (or own property in) any of the states below, the federal exemption number is almost beside the point. Your state's exemption is what matters:

Second, don't confuse "below the exemption" with "no planning needed." The estate tax exemption is one piece — and arguably not even the most important piece — of a complete estate plan. If your estate is $2 million and you live in Oregon, you may owe state estate tax. And even if your estate is $1 million and you live in Florida (no state estate tax), you still need a plan for probate avoidance, healthcare decisions, asset protection, and making sure your beneficiaries actually receive what you intend.

Why You Still Need an Estate Plan

Here's the misconception that keeps estate planning attorneys busy: people hear "the exemption went up" and conclude they can put estate planning on hold indefinitely. This conflates estate tax planning with estate planning itself — and they are very different things.

Estate tax avoidance is one reason to plan. The rest of the reasons apply to essentially every adult:

Avoiding probate. Without a revocable living trust and properly titled assets, your estate will almost certainly go through probate — a court-supervised process that can take months to years, cost thousands of dollars in court and attorney fees, and is entirely public. A trust keeps things private, fast, and out of court.

Guardianship for minor children. If you have children under 18, your will is the only place you can legally name who raises them if you die. Without a will, a judge decides — and the person a court appoints may not be who you'd choose.

Healthcare directives and powers of attorney. An estate plan isn't just about what happens after you die. A healthcare directive (living will) and durable power of attorney determine who makes decisions for you if you're alive but incapacitated — after an accident, surgery, or serious illness. Without these documents, even your spouse may need to go to court to act on your behalf.

Asset protection. Certain trust structures protect assets from creditors, lawsuits, and Medicaid spend-down requirements. These strategies exist entirely outside the estate tax context.

Beneficiary designations and inherited IRAs. Life insurance, retirement accounts, and brokerage accounts with transfer-on-death designations pass outside your will entirely. If your beneficiary designations are outdated — an ex-spouse, a deceased parent, an estate — you've potentially created a mess regardless of how well your will or trust is drafted.

The estate tax exemption going up is genuinely good news. But it doesn't reduce the need for a plan — it just changes what the plan emphasizes.

Moves to Make in 2026

With the federal landscape clarified, here are the concrete actions worth taking this year:

1. Review your existing estate plan If you have a plan already, dust it off. The OBBBA represents a major change to the environment it was designed for. Plans created specifically to take advantage of the higher exemption before the anticipated sunset may need restructuring now that the urgency has shifted. At minimum, confirm your beneficiary designations, trustee appointments, and healthcare directives are current.
2. Evaluate any sunset-driven trust strategies If you used Grantor Retained Annuity Trusts (GRATs), Spousal Lifetime Access Trusts (SLATs), or made large taxable gifts specifically to use exemption before the sunset, talk to your estate planning attorney. Some of those moves may still serve valuable purposes. Others may be candidates for restructuring. The decision depends on your specific trust terms, tax situation, and family goals.
3. Focus on state estate tax planning if it applies to you If you live in Maryland, Washington D.C., New York, Massachusetts, Oregon, Washington State, or another state with a state-level estate tax, the federal exemption increase is largely beside the point. The real planning work is at the state level — through state-specific trusts, qualified terminable interest property (QTIP) elections, or credit shelter strategies that shelter assets from state estate tax.
4. Keep up the annual gift program The annual gift tax exclusion for 2026 is $19,000 per recipient. Annual gifting remains one of the cleanest and most flexible ways to transfer wealth tax-free over time — no trust required, no gift tax return for amounts under the annual exclusion. If you have adult children, grandchildren, or others you'd like to support, consistent annual gifting compounds meaningfully over years and decades.
5. Take the estate planning quiz Not sure where you actually stand? Our free 5-minute estate planning assessment evaluates your situation across estate size, family structure, state of residence, existing documents, and life stage — then gives you a personalized action plan. It takes less time than a commute and costs nothing.

The Bottom Line

The One Big Beautiful Bill Act resolved years of uncertainty about the federal estate tax exemption. The higher threshold is now permanent, the number is $15 million per person in 2026, and it will grow with inflation from 2027 onward. For most families, federal estate tax is no longer an active concern.

But here's the thing about breathing room: use it. The pressure to act before a deadline is gone, which means now is actually the ideal time to build an estate plan based on what genuinely fits your family — not one assembled under deadline pressure to beat a tax cliff.

If you're in a state with its own estate tax, talk to an estate planning attorney about state-specific strategies. If you have minor children, get a will and guardianship designation in place. If you don't have a revocable living trust, evaluate whether the probate avoidance benefits are worth it for your situation. And if you made significant moves before the sunset — large gifts, new trusts, accelerated giving — review them now with fresh eyes.

The federal estate tax may no longer be the urgent item on your list. But estate planning itself has never been more important — and never easier to do thoughtfully, without the noise of an impending deadline.

For a deeper dive into the federal and state estate tax landscape, see our full estate tax planning guide. For trust strategies that make sense in the current environment, visit our trusts guide.