Data Notice: This article covers the estate tax provisions of the One, Big, Beautiful Bill Act. Tax thresholds and planning strategies may be affected by future legislation or IRS guidance. Consult a licensed estate planning attorney and tax advisor for personalized recommendations.

Estate Tax Exemption Rises to $15 Million in 2026: Planning Strategies That Still Matter

This article provides general tax education and is not a substitute for professional tax or legal advice.

The One, Big, Beautiful Bill Act permanently raised the federal estate and gift tax exemption to $15 million per individual ($30 million for married couples) beginning January 1, 2026, with annual inflation adjustments starting in 2027. According to Seyfarth Shaw’s tax update, this represents the highest exemption in history and removes the threat of the scheduled sunset that had loomed over estate planning for years.

But does a higher exemption mean you can stop planning? The answer, for most high-net-worth families, is no.

What Changed

Before OBBBA

Under the Tax Cuts and Jobs Act of 2017, the estate tax exemption was scheduled to revert to approximately $7 million per individual on January 1, 2026 — a so-called “sunset” that drove urgent gifting activity throughout 2024 and 2025.

After OBBBA

According to Venable LLP’s analysis, the OBBBA eliminated the sunset entirely and set a new permanent baseline:

Individual exemption: $15 million (2026)
Married couple: $30 million (combined, with portability)
Annual gift exclusion: $19,000 per recipient ($38,000 for married couples)
Inflation indexing: Automatic annual adjustments starting 2027
Federal estate tax rate: 40% on amounts above the exemption

Who Needs to Plan Now

Estates Over $15 Million

For individuals with estates exceeding the new threshold, the 40% tax rate still applies to every dollar above $15 million. A $20 million estate faces $2 million in federal estate tax. State estate taxes — which apply at much lower thresholds in states like Massachusetts ($2 million), Oregon ($1 million), and New York ($7.16 million) — add additional exposure.

The Formula Clause Problem

According to J. Davenport Associates’ planning alert, many existing estate plans contain “formula clauses” that direct assets “up to the federal estate tax exemption” to children or into trusts. With the exemption now at $15 million, that same language could direct far more to children than the grantor intended — potentially leaving a surviving spouse with insufficient assets.

Action item: Review any estate plan created before 2026 for formula clauses that reference the federal exemption amount.

Key Planning Strategies

1. Spousal Lifetime Access Trusts (SLATs)

A SLAT allows one spouse to make a large irrevocable gift into a trust for the benefit of the other spouse and children. According to KDA Inc.’s trust planning guide, the gift removes assets from the donor spouse’s taxable estate while the beneficiary spouse retains indirect access to the trust’s assets.

SLATs are particularly useful for married couples with growing estates that may eventually exceed $30 million.

2. Grantor Retained Annuity Trusts (GRATs)

GRATs transfer appreciation above a minimum return to beneficiaries tax-free. According to Tax Specialty’s planning analysis, GRATs are especially powerful for families who have already used significant lifetime exemption and want to transfer additional wealth without dipping into the $15 million cap.

How it works: You transfer appreciating assets (stocks, business interests) into a GRAT, receive annuity payments back for a fixed term, and any growth above the IRS’s assumed interest rate (Section 7520 rate) passes to beneficiaries tax-free.

3. Annual Gifting Strategy

The $19,000 annual exclusion ($38,000 for married couples) allows systematic wealth transfer without touching the lifetime exemption. For a married couple with three children and six grandchildren, this amounts to $342,000 per year — or $3.42 million over a decade — that passes completely free of gift and estate tax.

4. Dynasty Trusts

For families looking to transfer wealth across multiple generations, dynasty trusts can shield assets from estate tax at each generational transfer. Combined with the $15 million GST (generation-skipping transfer) exemption, dynasty trusts can protect substantial family wealth indefinitely in states that allow perpetual trusts.

5. Irrevocable Life Insurance Trusts (ILITs)

An ILIT removes the death benefit of a life insurance policy from the taxable estate. For estates that will exceed the $15 million threshold, an ILIT can provide liquidity to pay estate taxes without adding to the taxable estate itself.

State Estate Taxes: The Hidden Trap

Even with a $15 million federal exemption, state estate taxes apply at much lower thresholds:

State	Estate Tax Threshold	Top Rate
Oregon	$1 million	16%
Massachusetts	$2 million	16%
Minnesota	$3 million	16%
New York	$7.16 million	16%
Washington	$2.193 million	20%
Connecticut	$13.61 million	12%

For residents of these states, estate planning remains essential even for estates well under the federal threshold.

For guidance on state tax differences, see our State Income Tax Comparison and Estate and Inheritance Tax Guide.

Practical Next Steps

According to Escalon’s business owner guide, advisors recommend securing 2025 appraisals for real estate and closely held businesses so that strategies rest on defensible fair market values. Key action items:

Review existing estate plans for outdated formula clauses
Get current appraisals on real estate and business interests
Consider trust structures if your estate exceeds state thresholds
Maximize annual gifting to family members
Coordinate with your tax advisor on the intersection with income tax planning

For more on how the OBBBA affects your other tax obligations, see our One Big Beautiful Bill New Deductions Guide and Federal Income Tax Guide 2026.

Sources

Planning for 2026: Trusts and Estates Tax Updates — Seyfarth Shaw LLP — accessed March 26, 2026
Estate Planning in the OBBBA Era — Venable LLP — accessed March 26, 2026
Estate Tax Exclusion 2026: Huge $15M Planning Moves — Tax Specialty — accessed March 26, 2026