FEDERAL ESTATE AND GIFT TAX IN 2026
Congress kept the higher estate-tax exemption. Planning still matters. The old 2025 sunset did not happen. Current federal law sets the basic exclusion amount at $15 million per individual for 2026 and indexes it for later years. That removes immediate federal estate-tax exposure for many families. It does not answer what you have already given away, whether both spouses can use their exclusions, how fast the estate may grow, what a lifetime gift does to income-tax basis, or how the family will pay a tax bill when the value is tied up in a business or real estate.
The number is not the plan
Federal estate tax asks how much taxable value passes at death. A working plan also asks who owns the assets, who controls them, what they are worth, how much cash is available, and what burdens land on a spouse, children, co-owners, and the executor.
The annual exclusion lets a person give up to $19,000 to each recipient in 2026 without using lifetime exclusion, assuming the gift qualifies. A larger gift is not automatically prohibited or taxed, but it may require a gift-tax return and may use part of the donor’s lifetime exclusion. The number is a tax rule, not a command to give.
Prior taxable gifts, earlier gift-tax returns, valuation work, and allocation of exemption can change how much room remains. A present balance sheet does not tell the whole story. The old Forms 709 matter.
Each spouse has a separate exclusion. A surviving spouse does not simply inherit the deceased spouse’s unused amount. Portability generally requires the executor to file a timely, complete Form 706 and make the election. How assets are titled and when they appreciate can also change the result.
Property given during life generally carries the donor’s income-tax basis. Property held until death may receive a basis adjustment under current law. Moving an appreciated asset out of the estate may reduce estate-tax exposure while increasing the family’s later capital-gains tax. Both sides belong in the same calculation.
A business, ranch, concentrated investment, or valuable real estate can grow faster than expected without putting cash in the executor’s account. If estate tax is due, the family may face a payment deadline while holding property it does not want to sell. Valuation and liquidity planning belong together.
Portability does not transfer unused generation-skipping transfer tax exemption. Transfers for children or grandchildren may need deliberate GST allocation and trust terms. Business succession, beneficiary protection, control, and governance also remain, even when projected federal estate tax is zero.
The 2026 figures were checked against the IRS Estate and Gift Tax What’s New page and the IRS 2026 inflation-adjustment release. Portability procedures appear in the IRS Instructions for Form 706.
General information only, not tax or legal advice. Reviewed August 18, 2026. Federal and state law, agency guidance, asset values, prior filings, and family facts can change the analysis.
If your plan involves prior gifts, a closely held business, large life insurance, rapidly appreciating property, or transfers to grandchildren, ask BOOK LAW FIRM to review the whole picture before assets move.
