The federal estate tax limit for 2026 is $15 million per person, meaning an estate owes no federal estate tax if its total value stays at or below that threshold. Married couples who use portability can shield up to $30 million combined. Congress set this figure in the One, Big, Beautiful Bill Act signed into law on July 4, 2025, replacing the expiring Tax Cuts and Jobs Act exemption and making the higher amount permanent with future inflation adjustments.1Internal Revenue Service. What’s New — Estate and Gift Tax Amounts above the limit are taxed at graduated rates topping out at 40%.
How the $15 Million Limit Works
The exemption is formally called the “basic exclusion amount” under Internal Revenue Code Section 2010, and for 2026 it sits at $15,000,000 per individual.2Office of the Law Revision Counsel. 26 U.S. Code 2010 – Unified Credit Against Estate Tax Beginning in 2027, the figure will be adjusted annually for inflation, rounded to the nearest $10,000.
A quick note on why other numbers are still floating around online. The Tax Cuts and Jobs Act of 2017 temporarily doubled the exemption, producing figures of $13.61 million in 2024 and $13.99 million in 2025.3Internal Revenue Service. Estate Tax That doubling was scheduled to expire at the end of 2025, which would have dropped the exemption to roughly $7 million.4Internal Revenue Service. Estate and Gift Tax FAQs The One, Big, Beautiful Bill Act preempted the sunset and set the exemption at $15 million with no expiration date.
What Counts Toward the $15 Million Threshold
Before you compare your wealth to the limit, understand what the IRS pulls into the “gross estate.” The number is almost always larger than people expect, because it includes far more than bank accounts and real estate. Your gross estate captures the fair market value of everything you own or hold certain rights over at the time of death: homes, investment accounts, business interests, vehicles, personal property, and cash.
Two categories catch people off guard. If you own a life insurance policy on your own life, or hold any “incidents of ownership” such as the right to change beneficiaries or borrow against it, the full death benefit counts toward your gross estate even though the money goes directly to the named beneficiary.5Office of the Law Revision Counsel. 26 U.S. Code 2042 – Proceeds of Life Insurance A $3 million policy can move an otherwise modest estate past a state exemption threshold. Retirement accounts like 401(k)s and traditional IRAs are also included at their full value, even though heirs will owe income tax on withdrawals.
Deductions reduce the taxable estate before the exemption is applied. The unlimited marital deduction lets you leave any amount to a U.S. citizen spouse without triggering estate tax, and charitable bequests to qualified organizations are deductible with no cap.6Office of the Law Revision Counsel. 26 USC 2056 – Bequests to Surviving Spouse Debts of the decedent, administrative expenses, and funeral costs also come off the top. An estate with a $16 million gross value, $200,000 in debts, and a $1 million charitable bequest has a taxable estate of $14.8 million, below the exemption.
Federal Estate Tax Rates Above the Limit
The estate tax is not a flat 40%. It uses a graduated schedule that starts at 18% and climbs through twelve brackets before reaching 40% on amounts more than $1 million above the exemption.7Office of the Law Revision Counsel. 26 U.S. Code 2001 – Imposition and Rate of Tax The lower brackets compress quickly, so most taxable estates effectively pay close to 40% on the bulk of the excess. The schedule applied to the amount over the exemption:
- $0 to $10,000: 18%
- $10,001 to $20,000: 20%
- $20,001 to $40,000: 22%
- $40,001 to $60,000: 24%
- $60,001 to $80,000: 26%
- $80,001 to $100,000: 28%
- $100,001 to $150,000: 30%
- $150,001 to $250,000: 32%
- $250,001 to $500,000: 34%
- $500,001 to $750,000: 37%
- $750,001 to $1,000,000: 39%
- Over $1,000,000: 40%
An estate worth $16 million in 2026 has $1 million subject to tax. Working through the brackets, the total federal estate tax bill comes to roughly $345,800.
Doubling the Limit to $30 Million With Portability
Married couples get a tool called portability, which lets a surviving spouse claim whatever portion of the first spouse’s $15 million exemption went unused. If the first spouse dies with a $6 million estate, the remaining $9 million of unused exemption transfers to the survivor, who then has a combined exemption of $24 million. At maximum, a couple can shield $30 million from federal estate tax.2Office of the Law Revision Counsel. 26 U.S. Code 2010 – Unified Credit Against Estate Tax
Portability is not automatic. The executor of the first spouse’s estate must file Form 706 and elect to transfer the unused exemption, even if the estate is too small to owe any tax.8Internal Revenue Service. Frequently Asked Questions on Estate Taxes For estates not otherwise required to file, Revenue Procedure 2022-32 allows a simplified late election up to five years after the date of death, with the return marked “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).” No filing fee applies.9Internal Revenue Service. Revenue Procedure 2022-32 Beyond the five-year window, the unused exemption is gone.
One boundary matters here. The marital deduction and portability apply only when the surviving spouse is a U.S. citizen. If the surviving spouse is not a citizen, no marital deduction is allowed unless assets pass through a qualified domestic trust (QDOT), which defers rather than eliminates the tax.6Office of the Law Revision Counsel. 26 USC 2056 – Bequests to Surviving Spouse
Lifetime Gifts Count Against the Limit
The federal system treats gifts made during life and assets left at death as a single unified pot. The $15 million exemption covers both, so gifts made above the annual exclusion reduce what’s available at death.
The 2026 annual gift tax exclusion is $19,000 per recipient.10Internal Revenue Service. Frequently Asked Questions on Gift Taxes You can give up to $19,000 to any number of people each year without filing a gift tax return or touching your lifetime exemption. Married couples can combine to give $38,000 per recipient.
Gifts above the annual exclusion require Form 709 and reduce the remaining lifetime exemption dollar for dollar. A $119,000 gift in 2026 uses the $19,000 annual exclusion, and the remaining $100,000 comes off the $15 million exemption, leaving $14.9 million.11Office of the Law Revision Counsel. 26 U.S. Code 2503 – Taxable Gifts No tax is actually due until the combined total of lifetime taxable gifts and the estate at death exceeds the exemption.
State Estate Taxes Are a Separate Story
The $15 million federal limit is generous enough that fewer than 1% of estates owe federal tax. State-level estate taxes work differently. Twelve states and the District of Columbia impose their own estate taxes with thresholds far below the federal level, and five additional states levy inheritance taxes paid by the beneficiary rather than the estate. Maryland imposes both.
State thresholds vary widely. Oregon taxes estates at $1 million and up, the lowest in the country. Massachusetts begins at $2 million. Other states set thresholds between $3 million and $7 million, and a few tie their exemptions to the federal figure. State estate tax rates generally run from about 0.8% to 16%, with a few states reaching as high as 20%. An estate worth $5 million owes nothing federally but could face a six-figure state bill depending on where the decedent lived or held property. The federal exemption provides no protection at the state level.
When Form 706 Is Due
If the gross estate plus adjusted taxable gifts exceeds $15 million, the executor must file Form 706 within nine months of the date of death.12Office of the Law Revision Counsel. 26 USC 6075 – Time for Filing Estate and Gift Tax Returns An automatic six-month extension is available by filing Form 4768 before that deadline, but the extension covers filing only. Any tax owed is still due at the nine-month mark, and late payment triggers penalties and interest.8Internal Revenue Service. Frequently Asked Questions on Estate Taxes Estates below the $15 million threshold may still want to file solely to elect portability for a surviving spouse, using the five-year simplified process where the standard filing requirement doesn’t otherwise apply.