The federal estate tax exemption for 2026 is $15 million per individual, meaning most estates owe nothing to the IRS. A married couple using portability can shield up to $30 million. The One, Big, Beautiful Bill (Public Law 119-21), signed into law on July 4, 2025, permanently set this higher threshold and eliminated the sunset that had loomed over estate planning for years. Inflation adjustments begin in 2027, so the figure will only grow from here.
Where the $15 Million Number Comes From
For anyone dying in 2026, the basic exclusion amount is a flat $15 million.1Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax The One, Big, Beautiful Bill amended the Internal Revenue Code to replace the old $5 million base amount (temporarily doubled to $10 million under the 2017 Tax Cuts and Jobs Act) with $15 million as the new permanent floor.2Internal Revenue Service. What’s New – Estate and Gift Tax Anything below that threshold passes to heirs free of federal estate tax.
This matters because estate planning had been in limbo. The TCJA-era exemption was $13.61 million in 2024 and $13.99 million in 2025, but those elevated levels were scheduled to drop back to roughly $7 million on January 1, 2026. The new law eliminated that sunset entirely. There is no expiration date on the $15 million exemption.
Starting in 2027, the base will adjust annually for inflation, using 2025 as the reference year.1Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax For 2026 itself, the number is a flat $15 million with no inflation adjustment.
Lifetime Gifts Share the Same Exemption
The federal government treats lifetime gifts and transfers at death as a single pool. The same $15 million covers both.3Office of the Law Revision Counsel. 26 US Code 2505 – Unified Credit Against Gift Tax Every dollar of the exemption used for gifts during your lifetime reduces what remains to shelter your estate at death. Give $6 million in taxable gifts while alive, and your estate has $9 million of exemption left.
Not every gift counts against the lifetime pool. You can give up to $19,000 per recipient per year in 2026 without touching any of your $15 million.4Internal Revenue Service. Frequently Asked Questions on Gift Taxes A married couple giving jointly can transfer $38,000 per recipient per year, entirely outside the lifetime exemption system. Tuition paid directly to an educational institution and medical expenses paid directly to a provider are also excluded, with no dollar cap.
Portability: How Married Couples Reach $30 Million
Portability lets a surviving spouse inherit whatever portion of the deceased spouse’s $15 million exemption went unused. The technical name is the deceased spousal unused exclusion amount, or DSUE.1Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax If one spouse dies in 2026 using only $2 million of their exemption, the survivor can add the remaining $13 million to their own $15 million, creating a combined shield of $28 million. When both full exemptions are preserved, the couple can pass up to $30 million free of federal estate tax.
You Have To File Form 706 To Claim It
The executor of the first spouse’s estate must file IRS Form 706 to elect portability, even if the estate owes no tax.5Internal Revenue Service. Instructions for Form 706 This is where families quietly lose money. If the first spouse’s estate is under $15 million and nobody files, the unused exemption disappears. The surviving spouse’s estate cannot claim it later.
Form 706 is normally due nine months after the date of death, with an automatic six-month extension available by filing Form 4768.5Internal Revenue Service. Instructions for Form 706 Estates that missed the deadline and were not otherwise required to file have a safety net: under Rev. Proc. 2022-32, the executor can file a late portability election up to five years after the date of death, with the return stating at the top that it is filed under that revenue procedure. After five years, the only option is requesting a private letter ruling from the IRS, which is expensive and not guaranteed.
What Counts Toward the $15 Million
The gross estate includes everything you own or control at the time of death, valued at fair market value.6Office of the Law Revision Counsel. 26 US Code 2031 – Definition of Gross Estate Real estate, bank accounts, investment portfolios, retirement accounts, vehicles, personal property, business interests. Life insurance proceeds count if you held any ownership rights in the policy at death. Fair market value is what a willing buyer would pay a willing seller, not what you originally paid and not the assessed value on your property tax bill.
This distinction trips up families. A house bought for $200,000 decades ago might have a fair market value of $1.2 million at the owner’s death. Professional appraisals are often necessary for real estate, closely held businesses, and collectibles to establish values that hold up to IRS scrutiny.
Heirs Get a Step-Up in Basis
Inherited property gets a tax reset. The cost basis of any asset acquired from a decedent adjusts to its fair market value at the date of death.7Office of the Law Revision Counsel. 26 US Code 1014 – Basis of Property Acquired From a Decedent If a parent bought stock for $50,000 and it was worth $500,000 at death, the heir’s basis becomes $500,000. Selling immediately triggers zero capital gains tax. This step-up applies whether or not the estate owed any estate tax.
Deductions That Shrink the Taxable Estate
The taxable estate, which is what actually gets measured against the exemption, is smaller than the gross estate because of available deductions. The three that matter most:
- Marital deduction. Assets left to a surviving spouse who is a U.S. citizen pass completely free of estate tax, with no dollar limit. Most married couples owe nothing when the first spouse dies, regardless of estate size. The catch is timing: this only defers the tax, because whatever the survivor inherits becomes part of their own estate.
- Charitable deduction. Bequests to qualified charities reduce the taxable estate dollar for dollar. At a 40% top marginal rate, a $100,000 charitable bequest costs the estate roughly $60,000 after tax savings.
- Debts and expenses. Outstanding debts, mortgage balances, funeral costs, and administration expenses (attorney fees, executor commissions, appraisal costs) are all deductible.
What Estates Above $15 Million Owe
Amounts above the $15 million exemption face a graduated rate structure that tops out at 40%.8Office of the Law Revision Counsel. 26 USC 2001 – Imposition and Rate of Tax Rates start at 18% on the first $10,000 above the exemption and climb through a dozen brackets, but the credit effectively wipes out the lower brackets. For any estate large enough to actually owe tax, the effective marginal rate on the taxable portion is 40%.
In concrete terms: a single person dying in 2026 with a $17 million estate faces tax on $2 million, the amount above $15 million. At the top rate, that produces roughly $800,000 in federal estate tax. The effective rate on the total estate, though, is under 5%.
Filing Deadline and Penalties
Estates that exceed the filing threshold must file Form 706 within nine months of the date of death.5Internal Revenue Service. Instructions for Form 706 The automatic six-month extension covers filing the return but does not extend the deadline to pay. Interest accrues on any unpaid balance from the original due date.
Late filing carries a penalty of 4.5% of the unpaid tax per month, up to 25%. Late payment adds 0.5% per month, also capped at 25%. When both penalties run at the same time, the combined maximum can reach 47.5% of the unpaid tax, on top of interest.
State Estate Taxes Still Apply
The $15 million federal exemption does not protect you from state-level estate taxes. Roughly a dozen states and the District of Columbia impose their own estate or inheritance taxes, and their thresholds run dramatically lower. Some start as low as $1 million. A family whose estate falls well below the federal exemption might still face a six-figure state tax bill depending on where they live. State estate taxes are deductible on the federal return but do not reduce the federal exemption itself, so affected families need to plan for both layers.
The Rules Are Very Different for Non-Citizens
Non-citizen, non-resident individuals do not get the $15 million exemption. Instead, they receive a tax credit of $13,000, which shelters only about $60,000 worth of U.S.-situated assets from estate tax.9eCFR. 26 CFR 20.2102-1 – Estates of Nonresidents Not Citizens, Credits Against Tax Everything above that faces the same 40% top rate.10Office of the Law Revision Counsel. 26 USC 2101 – Tax Imposed U.S.-situated assets include American real estate, tangible personal property located in the country, and stock in U.S. corporations. International tax treaties can override this default and provide higher amounts.
The unlimited marital deduction also does not apply when the surviving spouse is not a U.S. citizen. The annual gift tax exclusion for transfers to a non-citizen spouse is $194,000 for 2026, well above the standard $19,000 per recipient. For transfers at death, a Qualified Domestic Trust (QDOT) can defer estate tax until the non-citizen surviving spouse either receives distributions of principal or dies. A QDOT must have at least one U.S. citizen or domestic corporate trustee, and that trustee must have the right to withhold estate tax on principal distributions.