The federal unified tax credit lets one person transfer up to $15 million in assets during life and at death without owing any federal gift or estate tax in 2026. A married couple can shield up to $30 million combined.1Internal Revenue Service. What’s New — Estate and Gift Tax Anything above that exclusion is taxed at a flat 40%. The credit is called “unified” because lifetime gifts and transfers at death share the same pool: every dollar of taxable gifts you make while alive is one less dollar available to shelter your estate later.
The 2026 Unified Credit at a Glance
The figures below are the ones you actually need from the unified tax credit table for 2026.
- Basic Exclusion Amount (BEA) per person: $15,000,0002Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax
- Combined exclusion for a married couple: $30,000,000
- Tax rate on amounts above the exclusion: 40%
- Annual gift exclusion per recipient: $19,000
- Annual exclusion for gifts to a noncitizen spouse: $194,0003Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
- Generation-skipping transfer (GST) tax exemption: $15,000,000
The tax code technically has a graduated bracket structure that begins at 18%, but the credit cancels out all the tax that would otherwise be owed on the first $15 million. In practice, the first dollar over the exclusion is taxed at 40%, which makes the federal estate and gift tax behave like a flat tax on the amount above the exclusion.
The unified credit itself is not a dollar amount you subtract from your estate. It is the tax equivalent of the exclusion, meaning it offsets the exact tax that would be owed on the first $15 million of transfers. The BEA is what you can transfer; the credit is the mechanism that makes it tax-free.
Is the $15 Million Exclusion Permanent?
Yes. Before July 2025, the exclusion was scheduled to drop at the end of 2025 to roughly $7 million as the Tax Cuts and Jobs Act expired.4Internal Revenue Service. Estate and Gift Tax FAQs The One, Big, Beautiful Bill Act, signed on July 4, 2025, eliminated the sunset and reset the statutory BEA to $15,000,000 for 2026, with inflation adjustments every year after.2Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax The higher figure is now the permanent baseline.
Large gifts made between 2018 and 2025 to beat the expected sunset remain protected. IRS anti-clawback regulations finalized in 2019 let an estate calculate its credit using the higher of the BEA at the time of the gift or the BEA at death.4Internal Revenue Service. Estate and Gift Tax FAQs Those rules stay on the books in case Congress ever reduces the exclusion again.
How Lifetime Gifts Use Up the Credit
You can give $19,000 per recipient per year with no paperwork and no effect on your lifetime exclusion. Give the same person $100,000, and $81,000 of that becomes a taxable gift that eats into your $15 million BEA. You will not owe actual gift tax until you have given away taxable gifts totaling more than $15 million, but you still need to report the overage on IRS Form 709.5Internal Revenue Service. Instructions for Form 709 (2025) The cumulative taxable gifts carry forward on every future Form 709 and eventually appear on the estate tax return.
Filing matters even when zero tax is due. Without a return that adequately describes the gift, the IRS can challenge its value with no time limit. Once a return is filed with proper disclosure, the IRS generally has three years to raise a valuation dispute.6Internal Revenue Service. TD 8845 – Adequate Disclosure of Gifts Skipping the filing to save paperwork can leave heirs defending gift values decades later.
Gift Splitting for Married Couples
Spouses can elect to treat any gift made by either of them as if each gave half. Gift splitting effectively doubles the annual exclusion to $38,000 per recipient and spreads larger taxable gifts evenly across both spouses’ lifetime exclusions.5Internal Revenue Service. Instructions for Form 709 (2025) The election applies to every gift made by either spouse that year; you cannot split some and not others. Both must have been married at the time of the gift, and neither can be a nonresident noncitizen. One detail worth noting: once the election is made, both spouses are jointly liable for the full gift tax, not just their half.
How the Credit Applies at Death
Whatever remains of the $15 million exclusion after lifetime taxable gifts shelters the estate. The calculation starts with the gross estate, which is broader than most people assume: probate property, life insurance the decedent owned, retirement accounts, jointly held property, revocable trusts, and certain lifetime transfers with retained interests all get added in at fair market value on the date of death.7eCFR. 26 CFR 20.2031-1 – Definition of Gross Estate; Valuation of Property A term life policy you owned and forgot about adds its full death benefit to your gross estate, which can push an otherwise-safe estate over the $15 million line.
From the gross estate, the executor subtracts debts, funeral expenses, administration costs, and two unlimited deductions worth knowing. The marital deduction lets any amount of property pass to a surviving U.S. citizen spouse free of estate tax, with the tax deferred until the second spouse’s death.8Office of the Law Revision Counsel. 26 USC 2056 – Bequests, Etc., to Surviving Spouse The charitable deduction removes any property left to qualifying charities. What remains is the taxable estate. Lifetime taxable gifts get added back, the tentative tax is computed, and the unified credit is applied.9Internal Revenue Service. Estate Tax If the credit covers the full tentative tax, nothing is owed.
Heirs also benefit from the step-up in basis. Inherited assets receive a new cost basis equal to fair market value on the date of death, so appreciation that built up during the decedent’s lifetime escapes capital gains tax entirely when the heir sells.10Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent The step-up applies whether or not the estate owes any estate tax.
The executor must file IRS Form 706 if the gross estate plus adjusted taxable gifts exceeds $15,000,000 for a 2026 death.9Internal Revenue Service. Estate Tax The return is due nine months after death, with an automatic six-month extension available on Form 4768.11Internal Revenue Service. Instructions for Form 706 (09/2025)
Portability: Reaching the $30 Million Combined Exclusion
A married couple’s combined $30 million exclusion is not automatic. It depends on portability, which lets a surviving spouse inherit the deceased spouse’s unused exclusion amount (the DSUE). If the first spouse to die used only $5 million of their $15 million exclusion, the remaining $10 million can transfer to the survivor, giving them a combined $25 million.1Internal Revenue Service. What’s New — Estate and Gift Tax
To claim it, the executor of the first spouse’s estate must file Form 706 and elect portability, even if the estate is well below the $15 million filing threshold and would otherwise have no reason to file.11Internal Revenue Service. Instructions for Form 706 (09/2025) Missing the nine-month deadline can forfeit millions in future tax savings.
Executors who missed the deadline have a second chance. If the estate was not otherwise required to file, Revenue Procedure 2022-32 allows a late portability election up to the fifth anniversary of the decedent’s death, so long as the return states across the top that it is filed under Rev. Proc. 2022-32.12Internal Revenue Service. Revenue Procedure 2022-32 The relief applies only to estates of U.S. citizens or residents who died after December 31, 2010 and were survived by a spouse. Estates that were actually required to file cannot use this shortcut.
Two portability limits catch people off guard. First, the DSUE comes only from the most recent deceased spouse. A surviving spouse who remarries and outlives the second spouse loses the first spouse’s unused exclusion unless it was used before the second death. Second, portability covers the estate and gift exclusion only. The separate $15 million generation-skipping transfer tax exemption is not portable,1Internal Revenue Service. What’s New — Estate and Gift Tax so families planning transfers to grandchildren need to allocate the GST exemption during each spouse’s lifetime.
State Estate and Inheritance Taxes Are Separate
The federal unified credit protects only against federal transfer taxes. Roughly a dozen states and the District of Columbia impose their own estate taxes, often with exclusions far below $15 million (some as low as around $1 million). An estate worth $5 million can owe nothing to the IRS and still face a six-figure state bill.
A handful of states impose inheritance taxes instead of, or in addition to, estate taxes. Inheritance tax is paid by the person receiving the assets, with the rate depending on their relationship to the decedent. Spouses are typically exempt, close relatives pay lower rates, and unrelated beneficiaries can be taxed at rates reaching 16%. One state levies both. Anyone with assets in a state that imposes its own transfer tax needs state-specific planning on top of the federal picture.