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If you've read that the estate tax exemption is about to crash back down to roughly $7 million, that's outdated information. The One Big Beautiful Bill Act (OBBBA, P.L. 119-21), signed July 4, 2025, permanently eliminated the scheduled 2026 sunset and set the federal estate and gift tax exemption at $15 million per individual and $30 million per married couple through portability (IRS Rev. Proc. 2025-32, 2025).
That permanence changes the planning conversation. Estate tax planning strategies for 2026 no longer center on racing the clock before an exemption cliff. They center on a different question: which mix of lifetime gifting, trust structures, and basis step-up planning actually minimizes your family's total tax burden under law that's now built to last.
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Key Takeaways: OBBBA permanently removed the TCJA sunset, setting the 2026 exemption at $15 million per individual and $30 million per married couple, indexed for inflation. The old "use it or lose it" urgency is gone for most families; holding appreciated assets until death to capture the IRC Section 1014 basis step-up may now beat aggressive lifetime gifting. Zeroed-out GRATs remain valid under current law, but the reintroduced GRATs Act would impose a 15-year minimum term if it passes. 74% of high-net-worth individuals still have no formal estate plan, including many with more than $25 million in assets
The 2026 federal estate and gift tax exemption is $15 million per individual and $30 million per married couple using portability, up from $13.99 million in 2025, and it's now permanent rather than scheduled to revert. The top federal estate tax rate remains 40% on amounts above the exemption.
Citation capsule: The OBBBA permanently set the federal estate and gift tax exemption at $15 million per individual for 2026, replacing the TCJA's scheduled reversion to roughly $7 million. Married couples can shelter up to $30 million through portability, and the figure will now be indexed for inflation every year going forward.
Before OBBBA, the Tax Cuts and Jobs Act had doubled the exemption temporarily, with a hard sunset scheduled for January 1, 2026 that would have cut it roughly in half. That sunset drove years of "gift now" advice. OBBBA didn't extend the higher exemption for a few more years. It struck the sunset provision entirely, according to analysis from Morgan Lewis and RSM.
The $15 million figure is a federal number only, and it doesn't tell the whole story for every family. A dozen or so states, including Massachusetts, Oregon, New York, Illinois, Washington, and Connecticut, still impose their own separate estate or inheritance tax, several with exemptions as low as $1 to $2 million and little or no portability between spouses. A couple who owes zero federal estate tax under the new $30 million combined exemption can still owe state estate tax in the tens or hundreds of thousands of dollars. State exposure has to be modeled separately, not assumed away by the higher federal number.
For the full mechanics of how the $15 million figure is calculated, indexed for inflation, and applied against lifetime taxable gifts, see our deep dive on the 2026 estate tax exemption.
The chart below shows exactly how far the exemption moved between the pre-OBBBA 2025 baseline and the new permanent 2026 figures, for both individuals and married couples using portability.
The urgency is gone because there's no longer a scheduled drop to plan around. With the exemption permanently set at $15 million and indexed for inflation, families with estates under that threshold face a genuinely different calculus than the one that dominated advice from 2023 through 2025.
Citation capsule: Property acquired from a decedent receives a basis step-up to fair market value at death under IRC Section 1014, while lifetime gifts carry over the donor's original cost basis with no step-up under IRC Section 1015. The stepped-up basis rule cost an estimated $72.5 billion in forgone federal revenue in 2026 alone, according to the Joint Committee on Taxation.
Here's the mechanism that matters most. Assets a decedent still owns at death get their basis reset to fair market value under IRC Section 1014. Assets gifted during life keep the donor's original, often much lower, cost basis under IRC Section 1015. That carryover basis becomes the heir's problem the moment they sell.
<!-- \[UNIQUE INSIGHT\] --> When the exemption was scheduled to shrink to roughly $7 million, gifting appreciated stock or real estate now, even at a lost step-up, made sense for families who'd otherwise owe estate tax on the excess. With the threshold permanently at $15 million per individual, a large share of previously "at risk" families sit comfortably below the exemption. For them, holding appreciated assets until death and capturing the step-up in basis can now outperform lifetime gifting, dollar for dollar, on the capital gains side.
This isn't a universal rule. Families well above $15 million, or $30 million as a couple, still benefit from moving future appreciation out of the taxable estate through lifetime transfers. The point is that the default answer changed. What used to be "gift aggressively before the window closes" is now "run the basis math before you gift anything away."
Three trust structures still do the heavy lifting for families above the $15 million threshold: the GRAT, the SLAT, and the IDGT. Each moves future appreciation out of a taxable estate through a different legal mechanism, and each carries distinct tradeoffs around access, control, and legislative risk.
Citation capsule: A zeroed-out GRAT lets a grantor transfer appreciating assets into an irrevocable trust while retaining fixed annuity payments, passing remaining growth to heirs largely gift-tax free. The technique was validated in Walton v. Commissioner (2000) and confirmed through Treas. Reg. Section 25.2702-3(e), Example 5, but a reintroduced Senate bill would impose a 15-year minimum GRAT term.
A GRAT lets you transfer assets into an irrevocable trust while keeping the right to fixed annuity payments over a set term, often two to ten years. Any appreciation above the IRS's Section 7520 hurdle rate, currently 5.2% for July 2026, passes to your beneficiaries with little to no gift tax.
The "zeroed-out" version of this structure was validated in Walton v. Commissioner and later accepted by the IRS in Rev. Proc. 2003-42. It remains fully legal today.
<!-- \[UNIQUE INSIGHT\] --> That said, watch the legislative horizon. Senators Wyden and King reintroduced the GRATs Act on April 14, 2026, a renewed version of prior legislation that would require a minimum 15-year GRAT term and end short-term zeroed-out GRATs. It's not law, and it isn't part of OBBBA. But it's a real signal that the current flexibility on GRAT terms may not last indefinitely.
A SLAT lets one spouse gift assets into an irrevocable trust that benefits the other spouse, removing the assets from the donor's estate while preserving indirect family access. The main legal risk is the reciprocal trust doctrine from U.S. v. Grace, 395 U.S. 316 (1969): if both spouses create substantially similar SLATs for each other, courts can "uncross" them and pull the assets back into both estates.
An IDGT is deliberately mismatched for tax purposes: it's a grantor trust for income tax, so you keep paying the trust's income tax, but it's excluded from your taxable estate. That mismatch enables installment sales of appreciating assets to the trust at the Applicable Federal Rate with no capital gains triggered, and your continued tax payments count as an additional, gift-tax-free transfer of wealth under Rev. Rul. 2004-64.
One more layer worth flagging before you pick a structure: the generation-skipping transfer (GST) tax. Gifts and bequests that skip a generation, for example from grandparent directly to grandchild, can trigger a separate 40% GST tax on top of gift or estate tax unless GST exemption is allocated to the transfer. GRATs are notoriously GST-inefficient, since GST exemption generally can't be effectively allocated until the trust term ends and the estate tax inclusion period (ETIP) closes, which limits how well a GRAT can benefit grandchildren directly. SLATs and IDGTs don't have that same ETIP problem and are typically easier to make GST-exempt from day one.
At a glance, here's how the three structures compare:
Choosing between these structures depends heavily on your asset mix, liquidity needs, and appetite for legislative risk. For a full side-by-side comparison of mechanics, costs, and ideal use cases, see our detailed breakdown of GRATs, SLATs, and IDGTs.
Portability lets a surviving spouse claim a deceased spouse's unused federal exemption (DSUE), effectively doubling the couple's shelter to $30 million in 2026. But the election isn't automatic. It requires a timely Form 706, filed within nine months of death, even for estates well below the filing threshold.
Citation capsule: Portability allows a surviving spouse to claim a deceased spouse's unused exclusion amount, but the election must be made on a timely filed Form 706 within nine months of death, extendable six months with Form 4768. Rev. Proc. 2022-32 gives estates that otherwise wouldn't need to file up to five years to make a late portability election.
Form 4768 buys an automatic six-month extension if you need more time to gather valuations or documentation. Miss both deadlines entirely, and Rev. Proc. 2022-32 still offers a lifeline: estates not otherwise required to file can make a simplified late election up to the fifth anniversary of the decedent's death.
<!-- \[PERSONAL EXPERIENCE\] --> In our work with surviving spouses, the most common and most avoidable mistake is skipping the Form 706 filing entirely because the estate falls well under $15 million. That decision quietly forfeits the DSUE, and it often isn't discovered until years later, when the surviving spouse's own estate has grown large enough that the missing exemption actually matters.
For most families now under the $15 million individual or $30 million married threshold, prioritizing basis step-up over aggressive lifetime gifting is the more tax-efficient default in 2026. Gifted assets carry over the donor's cost basis under IRC Section 1015, while assets held until death reset to fair market value under IRC Section 1014.
Citation capsule: For families comfortably below the $15 million individual exemption, holding highly appreciated assets until death to capture the IRC Section 1014 basis step-up frequently produces a better after-tax outcome than lifetime gifting, since gifted assets carry over the original cost basis under IRC Section 1015. Above the exemption, lifetime transfers of future appreciation still reduce overall estate tax exposure.
Run it as a three-part test before you gift anything away:
If your estate is unlikely to exceed the exemption and the asset carries substantial embedded gain, holding it until death usually wins. If you're well above the threshold, or the asset is likely to keep appreciating fast, moving it into a GRAT, SLAT, or IDGT structure still makes sense despite losing the step-up. This is exactly the kind of analysis worth running with a CPA and estate attorney together, since the answer depends on your full balance sheet, not just one asset.
The 2026 annual gift tax exclusion is $19,000 per recipient, meaning a married couple can gift $38,000 to any individual with no gift tax return required and no reduction to their lifetime exemption.
Citation capsule: The 2026 annual gift tax exclusion is $19,000 per recipient, or $38,000 for a married couple electing gift-splitting. These gifts don't reduce the donor's $15 million lifetime exemption and require no gift tax return when made outright to an individual.
Even with the higher lifetime exemption removing much of the urgency around large taxable gifts, the annual exclusion remains one of the simplest, lowest-risk estate reduction tools available. A couple with five children and ten grandchildren can move $570,000 out of their estate every year without touching their lifetime exemption at all.
The strategy gets more valuable when it's layered with trusts, education funding, and Crummey withdrawal rights rather than used in isolation. For a full walkthrough of how to structure recurring annual exclusion gifts, see our guide to the annual gift tax exclusion strategy for 2026.
Despite the higher, permanent exemption, 74% of high-net-worth respondents report having no estate plan at all, including many with more than $25 million in assets, according to Chubb's 2025 Wealth Report. That figure comes from an industry survey of 1,000 North American respondents with $1.5 million or more in investable assets, not a government dataset.
Citation capsule: Chubb's 2025 Wealth Report, an industry survey of 1,000 North American high-net-worth respondents fielded July through September 2025, found that 74% lack a formal estate plan, including a notable share with over $25 million in assets. The gap persists despite a permanently higher federal exemption.
Why does the gap persist when the stakes are this high? Part of it is simple avoidance. Estate planning forces uncomfortable conversations about mortality, family dynamics, and unequal inheritances. Part of it is a mistaken belief that a higher exemption means no planning is needed at all.
That belief misses the point. Even families with zero projected federal estate tax liability still need wills, powers of attorney, healthcare directives, and a coordinated beneficiary designation review. The exemption determines whether you owe estate tax. It doesn't determine whether your assets pass to the right people, at the right time, with the least friction.
Yes. OBBBA didn't extend the higher exemption for a set number of years, it removed the TCJA's sunset provision entirely, so the $15 million individual exemption is now permanent under current law and will continue adjusting for inflation each year. Congress could still change it through new legislation, but there's no scheduled expiration.
No. The IRS confirmed in prior guidance that taxpayers who used the higher pre-2026 exemption keep the benefit of those gifts and won't face a clawback, even though the exemption dropped in the interim years before OBBBA made the higher figure permanent. Your remaining lifetime exemption simply reflects what's left of the current $15 million figure.
Not necessarily. The $19,000 annual exclusion doesn't compete with your lifetime exemption at all, so it remains a free, ongoing way to reduce your taxable estate regardless of how large your lifetime exemption is. It's especially useful for families who want to transfer wealth gradually while retaining most of their lifetime exemption for larger, structured transfers later.
A GRAT moves future appreciation out of your estate while you retain fixed annuity payments for a term of years. A SLAT gifts assets into a trust for your spouse's benefit, preserving indirect access. An IDGT enables tax-free installment sales of appreciating assets by deliberately treating the trust as yours for income tax but not for estate tax. Each fits different asset types and risk tolerances.
You don't need to file to satisfy estate tax liability, but you should still file Form 706 within nine months of death if a surviving spouse wants to elect portability and preserve the deceased spouse's unused exclusion for later. Skipping the filing because the estate is small can quietly forfeit that additional exemption.
The permanent $15 million exemption is genuinely good news, but it's not a reason to stop planning. It's a reason to plan differently. Families now comfortably under the threshold often gain more from basis step-up planning than from urgent lifetime gifting, while families above $15 million, or $30 million as a couple, still need GRATs, SLATs, and IDGTs to keep future appreciation out of their taxable estate.
Legislative risk hasn't disappeared either. The GRATs Act is back in the Senate, and 74% of high-net-worth families still have no estate plan at all, permanent exemption or not. The right strategy depends on your specific asset mix, your family structure, and how close you actually sit to the new threshold.
Work with a CPA and estate planning attorney together to model your options under the current permanent exemption before you commit to a gifting or trust strategy that made sense under the old rules but may not fit your family anymore.
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Complex trusts hit the top 37% tax bracket at $15,650 of income. See how SLATs, GRATs, and GST planning protect family estates — from a CPA/attorney firm.
