Takeaways

• The federal estate tax exemption for 2026 will increase to $15 million per individual, with married couples exempt up to $30 million.
• The annual gift tax exclusion will remain at $19,000 per individual for 2026, with a lifetime gift and estate tax exemption of $15 million.

Last month, the Internal Revenue Service (IRS) released the gift tax and estate tax exclusions for tax year 2026. These exclusion amounts are adjusted annually to account for changes in the cost of living. The following updates become effective January 1, 2026.

2026 Federal Estate Tax Exemption

The federal estate tax exemption will increase to $15 million per individual in 2026 ($30 million for married couples) for people who die on or after January 1, 2026. This is up from $13.99 million for individuals dying in 2025.

Estates whose taxable value falls below that threshold generally will not owe federal estate tax. (Depending on the state you live in, however, you may or may not also be subject to state estate or inheritance tax.)

2026 Gift Tax Exemption

Also as of 2026, the annual exclusion for federal gift tax will remain at $19,000 per recipient. This means that an individual may give up to $19,000 during the 2026 calendar year to any one person without needing to file a gift tax return (Form 709). Married couples may effectively give up to $38,000 per recipient if they elect gift-splitting on Form 709 and should coordinate such gifts with a tax advisor.

The federal gift tax generally applies when you give any money or property, including cash, real estate, stocks, crypto, and valuable personal property, to someone without receiving something of equal value in exchange, and the amount you have given exceeds the annual exclusion amount. When federal gift tax is owed, it is typically imposed on the donor, not the recipient.

Gifts between spouses who are both U.S. citizens are typically unlimited and do not trigger gift tax. However, if your spouse is not a U.S. citizen, the annual exclusion for gifts to that spouse is limited to $194,000 in 2026 (up from $190,000 in 2025).

The lifetime gift and estate tax exclusion will be $15 million per individual in 2026. Taxable gifts you make during your lifetime reduce this total. You generally won’t owe gift tax until your cumulative taxable gifts exceed this lifetime exclusion. (At that point, additional gifts or estate transfers may be subject to tax.)

Review Your Estate Plan Despite the Increased Federal Estate Tax Exemption

Even with the significant increase in the federal estate tax exemption, it remains crucial for individuals to review and potentially update their estate planning documents for several reasons.

• State estate taxes. As mentioned above, many states have their own estate or inheritance taxes, and their exemption levels may be much lower than the federal exemption. An updated plan can help mitigate or avoid state-level taxes.
• Non-tax objectives. Estate planning is not solely about minimizing taxes. It also involves ensuring your assets are distributed according to your wishes, designating guardians for minor children, establishing trusts for beneficiaries with special needs, and outlining health care directives. These objectives are not affected by federal tax law changes and require periodic review.
• Changes in personal circumstances. Life events such as marriage, divorce, birth or adoption of children, death of a beneficiary or executor, or significant changes in wealth can all necessitate updates to an estate plan.
• Changes in beneficiaries or inheritances. You may wish to change who inherits your assets, or the specific assets they receive. Your relationships with beneficiaries can change, or their financial needs might evolve.
• Changes in laws (beyond federal estate tax). Other laws impacting estate planning, such as those related to powers of attorney, health care proxies, or trust administration, can change over time.
• Asset growth and composition. As your wealth grows or the nature of your assets changes (e.g., acquiring new property, starting a business, investing in new asset classes), your estate plan needs to reflect these changes to ensure proper management and distribution.
• Executor and trustee appointments. The individuals you’ve appointed as executors or trustees may no longer be suitable due to age, health, location, or changes in their own personal circumstances.
• Digital assets. With the increasing importance of digital assets (online accounts, cryptocurrency, intellectual property), it’s essential to include provisions for their management and transfer in your estate plan.
• Health care directives and power of attorney. It’s important to regularly review your living will and durable power of attorney for health care to ensure they still reflect your wishes regarding medical treatment and that your chosen agents are still appropriate.

While the higher federal exemption might reduce the number of estates subject to federal tax, a comprehensive estate plan addresses far more than just tax liabilities. Regular review ensures that your plan remains current, effective, and aligns with your evolving wishes and circumstances.

To get started on your estate plan or elder law planning, contact the Laiderman Law Firm.