What is the 2026 Federal Estate Tax Exemption?
The 2026 federal estate tax exemption is $15 million per person, or $30 million for a married couple, under the One Big Beautiful Bill Act signed July 4, 2025. Unlike prior law, this amount is permanent and indexed for inflation each year. Texas has no state estate or inheritance tax, so most Texas estates owe no estate tax at all — but estates above the exemption face a 40% federal tax rate, and every estate still needs a plan for probate, incapacity, and family protection.
For nearly a decade, estate planning conversations in Texas started with the same warning: the historically high federal estate tax exemption was scheduled to be cut roughly in half at the end of 2025. That cliff is gone. With the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, Congress set the federal estate, gift, and generation-skipping transfer (GST) tax exemption at $15 million per person beginning January 1, 2026 — permanently, with annual inflation adjustments.
This guide explains the 2026 numbers, what "permanent" really means, and how the exemption interacts with Texas law. And because the stakes are easier to feel than to calculate, it opens with a true story about what happens when an estate plan ignores the estate tax.
The Estate Tax Bill That Sold an NFL Team
The Story: Joe Robbie and the Miami Dolphins
Joe Robbie turned a $100,000 franchise fee into the Miami Dolphins — and when the city wouldn’t build the team a stadium, he financed one himself. When he died in 1990, his family faced a reported estate tax bill of close to $47 million. The problem: estate tax must be paid in cash, and the Robbie fortune wasn’t cash. It was a football team and a stadium. Within a few years — and amid family arguments his plan did not prevent — his heirs sold both, at prices many considered below their real value, largely to pay the tax bill. Five years after his death, the team and stadium he spent his life building no longer belonged to his family.
The Legal Answer
The federal estate tax is generally due in cash nine months after death, at rates up to 40% on everything above the exemption. Estates made up of businesses, ranches, mineral interests, or real estate are the ones that get hurt, because the IRS will not accept a share of a company as payment. Planning for where the cash will come from — life insurance trusts, buy-sell agreements, installment payment elections for family businesses — matters just as much as the exemption amount.
What This Means for You
If most of your net worth is in a business or land rather than bank and investment accounts, the exemption number is only half the question. The other half is: where would the cash come from to pay the tax? If you don’t have a good answer, that is the conversation to have with an estate planning attorney — while every option is still open.
The 2026 Numbers at a Glance
Here are the key federal transfer tax figures in effect for 2026:
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Federal estate and gift tax exemption: $15 million per person (up from $13.99 million in 2025).
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Married couples: $30 million combined, using both spouses’ exemptions.
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Generation-skipping transfer (GST) tax exemption: $15 million per person, tracking the estate tax exemption.
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Top federal estate and gift tax rate: 40% on amounts above the exemption.
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Annual gift tax exclusion: $19,000 per recipient, per year ($38,000 for a married couple electing gift-splitting).
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Annual exclusion for gifts to a non-citizen spouse: $194,000 for 2026.
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Texas state estate tax: none. Texas inheritance tax: none.
The exemption is "unified": it covers lifetime taxable gifts and transfers at death together. Annual exclusion gifts of $19,000 or less per recipient don’t count against the $15 million — they pass tax-free with no gift tax return required in most cases.
What Changed Under the One Big Beautiful Bill Act
The 2017 Tax Cuts and Jobs Act temporarily doubled the exemption, but that increase was scheduled to "sunset" on December 31, 2025, dropping to roughly $7 million per person. Families spent years racing that deadline. OBBBA eliminated the sunset entirely: beginning in 2026, the exemption is $15 million per person, indexed for inflation, with no expiration date. As a practical matter, "permanent" in tax law means "until Congress changes it again" — but there is no longer a statutory countdown forcing hurried decisions.
If you made large gifts in 2024 or 2025 in anticipation of the sunset, those gifts remain effective; nothing claws them back. If you were gifting purely to lock in the higher exemption, the urgency is gone — gifting decisions can now be driven by what actually serves your family: basis planning, asset protection, business succession, and control.
Does Texas Have an Estate or Inheritance Tax?
No. Texas imposes no state estate tax and no inheritance tax. The federal estate tax is the only death tax in the picture — an advantage over states like Oregon, Washington, Massachusetts, or New York, where state estate taxes reach much smaller estates. A married Texas couple can now pass up to $30 million with no estate tax of any kind — if the plan is structured properly and the right elections are made at the first death.
The Second Exemption Isn’t Automatic: A Portability Story
The Story: The Return Nobody Filed (composite — details combined and names changed)
A Dallas widow’s husband died in 2020. His estate was well under the exemption, so no estate tax was due — and the family skipped the federal estate tax return. Why file a return for a tax you don’t owe? Five years later, after a business sale and strong markets, her own estate had grown past what one exemption could cover. Her husband’s unused exemption could have erased the entire tax bill — but claiming it required filing that return after his death, and the deadline had passed. A form that would have cost a few thousand dollars to file ended up costing her heirs millions.
The Legal Answer
When the first spouse dies, their unused exemption transfers to the survivor only if the executor files a federal estate tax return (Form 706) and elects "portability"— generally within nine months of death, with a six-month extension available, and a simplified late option for certain estates up to five years. No return means no second exemption. This is one of the most commonly missed steps in Texas probate, precisely because most estates owe no tax and families assume no return is needed.
What This Means for You
If you have recently lost a spouse, ask a probate attorney about portability now — even if the estate seems safely under the exemption. Filing costs little, and it protects you against things you can’t predict: growth, an inheritance, a business sale, or Congress lowering the exemption someday.
Who Still Needs Estate Tax Planning in 2026?
With a $15 million per-person exemption, fewer than 1% of estates will owe federal estate tax. But "no estate tax" does not mean "no planning." Consider whether any of these apply:
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Your net worth — home, business, ranch or minerals, retirement accounts, and life insurance death benefits — is approaching eight figures or growing toward them.
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You own a family business or real estate portfolio likely to appreciate significantly before your death.
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You hold large life insurance policies you own personally: death benefits count in your taxable estate, and a $5 million policy can quietly push a safe estate over the line. An irrevocable life insurance trust (ILIT) fixes this.
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You are in a blended family and want both your spouse and your children from a prior marriage protected.
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You want assets shielded from a beneficiary’s divorce, creditors, or spending habits.
For estates near or above the exemption, 2026 is an excellent planning environment: spousal lifetime access trusts (SLATs), GRATs and sales to grantor trusts that shift future appreciation, family limited partnerships, and GST-exempt dynasty trusts that benefit children and grandchildren without a second round of tax at each generation.
The Step-Up in Basis: Why Dying With Assets Is Sometimes the Better Tax Plan
The permanent higher exemption makes income tax planning more important than estate tax planning for most families. Assets held until death receive a "step-up" in basis to fair market value, erasing lifetime capital gains; assets given away carry your old basis with them. Under the old sunset regime, families gave away appreciating assets to escape a shrinking exemption. With $15 million locked in, that trade-off often reverses: for estates safely under the exemption, holding low-basis assets until death is frequently the smarter move. Run this analysis with your attorney and CPA before making any large gift.
What Every Texas Estate Plan Still Needs — Regardless of the Exemption
The estate tax gets the headlines, but it has never been the reason most Texans need an estate plan. Whatever your net worth, a complete plan includes a valid Texas will (or living trust) naming an independent executor; a statutory durable power of attorney and medical power of attorney; a HIPAA release and directive to physicians; current beneficiary designations coordinated with the plan; and guardian designations and trust provisions for minor children. These documents decide whether your family faces a smooth transition or a court-supervised mess— at every asset level.
Reviewing an Existing Plan in Light of the 2026 Rules
If your will or trust was drafted before 2026 — especially between 2018 and 2025— it deserves a review. Many older plans use formula clauses that fund a "bypass" trust with the maximum exemption amount; with the exemption at $15 million, a formula written when it was $5 million can accidentally disinherit a surviving spouse by pushing nearly everything into a trust for the children. Others were built around sunset-driven gifting that no longer serves a purpose. A review is also the moment to confirm executors, trustees, and beneficiary designations still match your intentions.
Talk to a Dallas Estate Planning Attorney About the New Rules
The Ashmore Law Firm, P.C. has served Dallas and North Texas families for more than three decades, with a practice rooted in estate planning and probate — the firm was founded by the late Judge Joseph E. Ashmore, Jr., who served twelve years as Judge of Dallas County Probate Court No. 3. Gary Ashmore and Lori Ashmore Peters help families across Dallas, Highland Park, University Park, and greater DFW build plans that fit the new $15 million world: right-sized, tax-smart, and built to protect the people you love.
Frequently Asked Questions
What is the federal estate tax exemption for 2026?
For deaths and gifts in 2026, the federal estate, gift, and GST tax exemption is $15 million per person — $30 million for a married couple. Amounts above the exemption are taxed at rates up to 40%. The exemption is now permanent under the One Big Beautiful Bill Act and will be adjusted for inflation in future years.
Did the estate tax exemption sunset in 2026?
No. The scheduled 2026 sunset — which would have cut the exemption roughly in half — was eliminated by the One Big Beautiful Bill Act, signed July 4, 2025. Instead of dropping to about $7 million, the exemption rose to a permanent $15 million per person.
Does Texas have an estate tax or inheritance tax?
No. Texas imposes no state estate tax and no inheritance tax. The only death tax that can apply to a Texas estate is the federal estate tax, which in 2026 reaches only estates above $15 million per person.
How much can I gift tax-free in 2026?
You can give up to $19,000 per recipient in 2026 (or $38,000 as a married couple) without using any of your lifetime exemption or filing a gift tax return. Gifts above that amount typically require a gift tax return but rarely trigger actual tax — they simply reduce your $15 million lifetime exemption. Direct payments of tuition or medical expenses are unlimited if paid to the institution or provider.
Do I still need an estate plan if my estate is under $15 million?
Yes. The estate tax affects fewer than 1% of estates, but every Texas adult needs a will, powers of attorney, and medical directives. Without them, Texas intestacy law decides who inherits, a court may control the process, and no one has automatic authority to act for you if you become incapacitated.
What is portability, and do I need to file anything when my spouse dies?
Portability lets a surviving spouse claim their deceased spouse’s unused exemption — but only if the executor files a federal estate tax return (Form 706) and elects portability, generally within nine months of death (with extensions available). Many families skip this because no tax is due, then lose a second $15 million exemption they may need later. Ask a probate attorney about portability promptly after a spouse’s death.
