What Is the Estate Tax?
The federal estate tax is a tax on the transfer of property at death. It applies to the total value of a deceased person's assets — including real estate, investments, business interests, life insurance proceeds, and other property — above the exemption threshold. Only estates that exceed the exemption amount owe any federal estate tax. The tax is paid by the estate itself before assets are distributed to heirs.
The estate tax is closely linked to the gift tax system through a unified credit: lifetime gifts that exceed the annual exclusion reduce your available estate tax exemption dollar-for-dollar. This prevents individuals from simply giving away all assets before death to avoid the tax.
2026 Estate Tax Exemption
| Category | 2026 Amount |
|---|---|
| Individual exemption | $15,000,000 |
| Married couple (with portability) | $30,000,000 |
| Top marginal tax rate | 40% |
| Applicable credit amount | $5,945,800 |
Portability allows a surviving spouse to use the deceased spouse's unused exemption amount by filing IRS Form 706 (estate tax return), even if no estate tax is owed. This effectively doubles the exemption for married couples without requiring a bypass trust.
Annual Gift Tax Exclusion
| Scenario | 2026 Annual Exclusion |
|---|---|
| Individual gift per recipient | $19,000 |
| Married couple (gift-splitting) per recipient | $38,000 |
| Gifts to non-citizen spouse | $194,000 |
The annual exclusion covers up to $19,000 per recipient in qualifying present-interest gifts. Eligible spouses can use both annual exclusions for up to $38,000 per recipient. Gift-splitting requires consent and may require Form 709 even when no gift tax is due.
Reportable gifts can include gifts above the exclusion and gifts of future interests. Available gift tax credit generally offsets tax on taxable gifts until the applicable exclusion is used. Check the Form 709 instructions for exceptions and filing requirements.
Lifetime Gift Tax Exemption (Unified Credit)
The lifetime gift tax exemption is unified with the estate tax exemption at $15,000,000 for 2026. This means every dollar of taxable gifts you make during your lifetime (above the annual exclusion) reduces the amount that can pass tax-free at death. For example, if you make $3 million in taxable lifetime gifts, your remaining estate tax exemption at death would be $12,000,000.
| Tax Type | 2026 Exemption | Tax Rate |
|---|---|---|
| Estate tax | $15,000,000 | 40% |
| Gift tax (lifetime) | $15,000,000 (unified) | 40% |
| Generation-skipping transfer (GST) tax | $15,000,000 | 40% |
The generation-skipping transfer (GST) tax applies to transfers that skip a generation — for example, gifts or bequests directly to grandchildren. It has its own separate exemption of $15,000,000 and is taxed at a flat 40% rate on amounts above the exemption, in addition to any estate or gift tax.
For several years this figure carried a countdown attached to it. The Tax Cuts and Jobs Act of 2017 roughly doubled the estate tax exemption but only through the end of 2025, and the widely-planned-for outcome was a drop back to roughly $7 million per individual on January 1, 2026.
That reversion never took effect. Section 70106 of the One Big Beautiful Bill Act amended IRC § 2010(c)(3) to set the basic exclusion amount at $15,000,000 for calendar year 2026, and the amount is indexed for inflation for years after 2026 rather than expiring. The generation-skipping transfer exemption under § 2631(c) was set to the same $15,000,000. There is no scheduled cliff in current law.
What this changes in practice: planning built specifically around a 2025 deadline — rushed gifting to lock in exemption that was about to vanish — no longer has that deadline driving it. The estate tax itself has not gone away, and the 40% top rate is unchanged, so estates above $15,000,000 (or $30,000,000 for a married couple using portability) are still exposed.
Estate Planning Strategies
With the exemption now permanent and indexed, the planning question shifts from "act before the deadline" to "does my estate realistically approach $15,000,000." These strategies remain relevant:
Anti-clawback credit rule: Current Treasury Reg. § 20.2010-1(c) can preserve credit for qualifying earlier taxable gifts when the gift-date basic exclusion exceeds the death-date amount. Transfer-specific rules apply.
Annual Exclusion Gifts: Maximize annual exclusion gifts ($19,000/person) to reduce your taxable estate without touching your lifetime exemption. A married couple with three children and three grandchildren could transfer $228,000 per year gift-tax-free.
Irrevocable Trusts: Estate inclusion depends on retained interests, powers and insurance ownership. Review the trust terms and Form 706 Schedules D/G; irrevocability alone does not establish exclusion.
Portability Election: Ensure a Form 706 is filed at the first spouse's death, even if no tax is owed, to preserve the unused exemption for the surviving spouse.
Plan your financial future with our free Budget Planner
Open Budget Planner →Source: IRS Rev. Proc. 2025-32 § 4.42 (annual gift exclusion) and OBBBA § 70106 amending IRC § 2010(c)(3), which set the 2026 basic exclusion amount. See IRS OBBBA provisions and the IRS Form 709 instructions for gift reporting and election rules.
Frequently Asked Questions
What is the 2026 federal estate tax exemption?
The 2026 federal estate tax exemption is $15,000,000 per individual. Married couples can effectively shield up to $30,000,000 through portability — using the deceased spouse's unused exemption. The top tax rate on amounts above the exemption is 40%. These amounts come from IRC § 2010(c)(3) as amended by the OBBBA; the previously scheduled TCJA reversion did not take effect.
How much can I gift tax-free in 2026?
The 2026 annual exclusion is $19,000 per recipient for qualifying present-interest gifts. Eligible spouses can use both exclusions for up to $38,000 per recipient. Gift-splitting and certain other gifts can require Form 709 even if no tax is due.
Did the estate tax exemption drop in 2026 when the TCJA expired?
It did not. A reversion to roughly $7 million per individual was scheduled after 2025, but Section 70106 of the One Big Beautiful Bill Act amended IRC § 2010(c)(3) to set the 2026 basic exclusion amount at $15,000,000 and index it thereafter. The current anti-clawback credit rule is conditional; review the transfer-specific treatment.
What is the generation-skipping transfer (GST) tax in 2026?
The 2026 GST tax exemption is $15,000,000, matching the estate tax exemption. The GST tax rate is a flat 40%, applied to transfers that skip a generation (e.g., grandparent to grandchild). The GST exemption tracks the estate tax exemption and was set to $15,000,000 for 2026 by IRC § 2631(c) as amended by the OBBBA, with inflation indexing after 2026.
How this page is reviewed
See methodology, assumptions & sources
| Risk tier | High YMYL |
|---|---|
| Author | Calculover Editorial Team Finance and legal education |
| Editorial owner | Calculover Tax & Payroll Desk Tax and wage methodology owner |
| Reviewer | Calculover Editorial Review High-risk source and limitation review |
| Last reviewed | 2026-11-06 |
| Last verified | 2026-11-06 |
| Data effective date | 2026-01-01 |
Methodology
This page summarizes source-linked 2026 tax, retirement or benefit rules. Figures and examples use the year and assumptions stated in their tables; they do not determine a reader's complete individual outcome.
Assumptions
- Use the tax year or coverage year stated beside each amount; filing-year and source-publication dates may differ.
- Eligibility, filing status, exceptions and special circumstances must be checked against the linked official source.
Limitations
- 2026 Estate & Gift Tax Exemptions, Rates & Sunset Warning does not prepare a tax return, determine final liability, apply every credit or deduction, or account for all state, local, foreign, penalty, or surtax rules.
- Confirm current forms, thresholds, and filing obligations with the IRS, the relevant tax authority, or a qualified tax professional before filing or paying tax.
Sources
- Estate and Gift Taxes, Internal Revenue Service
- Federal Income Tax Rates and Brackets, Internal Revenue Service
Professional guidance: 2026 Estate & Gift Tax Exemptions, Rates & Sunset Warning is for tax education and planning only and is not tax, legal, accounting, or filing advice. Verify current rules with the relevant tax authority or a qualified tax professional.