Estate and Gift Tax Changes for 2026

Congress recently passed sweeping legislation, which includes many changes to tax policy, spending, and entitlement programs. One of the most significant changes for estate planning is an increase in the federal estate and gift tax exclusion.

Estate and Gift Tax Exclusion Increased Again

Under prior law, the federal estate and gift tax exclusion — just under $14 million per person — was scheduled to be cut in half after 2025, raising concerns for clients with significant wealth.

The good news for these clients is that this reduction will not occur. Instead, beginning in 2026, the federal estate tax exemption will increase to $15 million per person (or $30 million for married couples), with future increases tied to inflation

This change means that high net-worth families will be able to transfer even more wealth during life or at death without incurring federal estate or gift taxes.

Estate Tax Remains a Non-Issue for Most Families

Even before this change, estate tax was not a concern for more than 99.9% of Americans, thanks to historically high exclusion amounts amounts. Now that the exclusion has been increased even further, estate tax liability is an even more remote concern for the vast majority of families.

That said, individuals and couples with significant wealth, and those who may reach that threshold through appreciating assets, life insurance policies, or business interests, should still engage in proactive planning. 

Why This Still Matters

Although the exclusion increase is now considered “permanent,” it’s important to remember that Congress can change the law at any time. Future legislation could reduce the exemption again, creating uncertainty for wealthy families.

For that reason, it’s best to view today’s rules as an opportunity, not a guarantee. Those who have not yet used their full exclusion amount have additional time to plan before the end of 2025, and taking advantage of current rules could lock in valuable benefits.

Next Steps to Consider for High Net Worth Families

If you expect your estate to approach or exceed the new thresholds, here are some proactive steps to consider:

• Review Your Current Estate Plan: Make sure your documents still reflect your financial situation and long-term goals.
• Consider Strategic Gifts Before 2025 Ends: Making gifts now can “lock in” today’s higher exclusion amount and remove future appreciation from your taxable estate.
• Plan for Business Interests and Insurance: Remember that family businesses, investment growth, and life insurance proceeds can all push estates above the exclusion threshold.
• Stay Flexible: Build an estate plan that can adapt to future law changes.

Planning Ahead Gives You Options

Although federal estate tax will not affect most families, this change is a reminder that tax laws evolve, and proactive planning helps ensure your legacy is protected under both today’s and tomorrow’s rules.

Other Tax Changes in the New Tax Bill

The recent tax bill includes many other provisions beyond the estate tax. One of my favorite tax writers, Kelly Phillips Erb (Taxgirl), has a helpful article in Forbes answering common questions about the new law. You can read it here: Questions About The New Tax Bill? Taxgirl Has Answers.

The increase in the federal estate and gift tax exemption to $15 million in 2026 provides valuable planning opportunities for wealthy families. But because tax laws can change, it’s wise to take advantage of the current rules while they are in place.

If you have questions about how these changes might affect your estate plan, I encourage you to reach out. I am happy to review your documents, explain your options, and help you build a strategy that protects your family and preserves your wealth.