The federal estate tax exemption determines how much wealth you can pass on tax-free at death. For 2026, that amount is $15 million per individual — here is the complete guide, including what changed from 2025 and why the widely-discussed “TCJA sunset” no longer applies.
2026 Federal Estate Tax Exemption
| Detail | 2026 Amount |
|---|---|
| Individual exemption | $15 million |
| Married couple (with portability) | $30 million |
| Estate tax rate (above exemption) | 18%–40% |
| Annual gift tax exclusion | $19,000/recipient |
Source: IRS.gov, confirmed September 2026. The 2025 individual exemption was $13.99 million.
Estate Tax Exemption History
| Year | Individual Exemption |
|---|---|
| 2017 | $5.49 million |
| 2018 (TCJA doubled it) | $11.18 million |
| 2021 | $11.7 million |
| 2023 | $12.92 million |
| 2024 | $13.61 million |
| 2025 | $13.99 million |
| 2026 | $15 million |
What changed: Under the original Tax Cuts and Jobs Act (TCJA), the doubled exemption was scheduled to sunset — roughly halving to an inflation-adjusted ~$7 million — after December 31, 2025. That sunset did not happen. Legislation signed into law on July 4, 2025 amended Internal Revenue Code section 2010(c)(3) to set the basic exclusion amount at $15 million per individual for 2026, on a permanent footing rather than a temporary patch, with the amount indexed for inflation in future years. If you were planning around the old sunset-cliff scenario, that plan may now be outdated — confirm your strategy reflects the current law.
Who Actually Pays Estate Tax?
The IRS and independent tax-policy analysts have consistently found that only a small fraction of estates — commonly cited as under 0.2% — owe any federal estate tax, and that share is even smaller now that the exemption has risen to $15 million per individual ($30 million per married couple with portability):
- A family home worth $500,000 + $2 million retirement accounts + $1 million investments = $3.5 million estate — completely exempt
- Only estates worth more than $15 million (individual) or $30 million (married couple, with portability elected) face any federal estate tax
How the Estate Tax Is Calculated
$$\text{Estate Tax} = (\text{Taxable Estate} - \text{Exemption}) \times \text{Tax Rate}$$
Example: $20 million estate, individual filer, 2026 exemption
- Taxable amount: $20M − $15M = $5M above exemption
- Tax at a simplified flat 40% top rate: ~$2.0M federal estate tax owed (illustrative — the actual graduated rate schedule below produces a very similar result for amounts this far above the exemption, since almost all of the $5M falls in the top 40% bracket)
- Net to heirs: ~$18.0M
In practice, the tax is calculated on the graduated rate schedule from 18% to 40% shown below, not a single flat rate — the simplified 40% approximation above is close because most of the taxable amount in a large estate falls into the top bracket.
Federal Estate Tax Rates
| Taxable Amount Above Exemption | Tax Rate |
|---|---|
| $0–$10,000 | 18% |
| $10,001–$20,000 | 20% |
| $20,001–$40,000 | 22% |
| $40,001–$60,000 | 24% |
| $60,001–$80,000 | 26% |
| $80,001–$100,000 | 28% |
| $100,001–$150,000 | 30% |
| $150,001–$250,000 | 32% |
| $250,001–$500,000 | 34% |
| $500,001–$750,000 | 37% |
| $750,001–$1,000,000 | 39% |
| Over $1,000,000 above exemption | 40% |
This graduated rate schedule applies to the taxable amount above your exemption, not to your entire estate. It is unchanged by the 2025 legislation that raised the exemption amount.
Portability: Doubling the Exemption for Couples
When one spouse dies, their unused estate tax exemption can be “ported” to the surviving spouse:
- Executor must file IRS Form 706 within 9 months of the first death (or 6-month extension via Form 4768)
- The surviving spouse can then use both exemptions: up to $30 million combined in 2026
- Portability is not automatic — it must be affirmatively elected on a timely filed Form 706, even if the estate isn’t otherwise large enough to require filing
State Estate Taxes
Several states impose their own separate estate taxes, generally with much lower exemptions than the federal threshold. State exemption amounts and rates are set independently of federal law and change periodically — confirm the current figures directly with your state’s department of revenue before relying on them. As of recent years, states with their own estate tax have included Massachusetts, Oregon, Washington, Hawaii, Illinois, New York, Maryland, Minnesota, Vermont, Maine, Rhode Island, Connecticut, and Washington D.C.
Maryland is the only state with both a separate estate tax and an inheritance tax.
Estate Tax Planning Strategies
| Strategy | How It Helps |
|---|---|
| Annual gifts ($19,000/person/year in 2026) | Reduces estate size over time, outside the lifetime exemption |
| Irrevocable life insurance trust (ILIT) | Keeps life insurance proceeds out of the taxable estate |
| Charitable giving / CRT | Reduces the taxable estate and can provide income to you or heirs |
| Grantor retained annuity trust (GRAT) | Transfers future appreciation out of the estate |
| Spousal lifetime access trust (SLAT) | Locks in use of the current exemption while retaining indirect spousal access |
This table describes categories of estate-planning strategies for general education. It is not personalized advice — a large estate above the exemption threshold generally warrants working with an estate planning attorney and CPA.
Related Guides
- Estate Planning Guide
- Living Trust Guide
- Revocable vs. Irrevocable Trust
- Beneficiary Designation Guide
Sources
- Internal Revenue Service. “Estate Tax.” irs.gov/businesses/small-businesses-self-employed/estate-tax
- Internal Revenue Service. “What’s New — Estate and Gift Tax.” irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax
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