Estate tax 2026: $15 million each, and one form worth $2 million
The 2026 exclusion is $15,000,000 and the annual gift exclusion $19,000. A $20 million estate owes $2,000,000 or $0 depending on one Form 706 election.
- What happened
- For 2026 the federal basic exclusion amount is $15,000,000 per person, set by Public Law 119-21 of July 4, 2025, up from $13,990,000 in 2025. The annual gift exclusion is $19,000 per recipient, unchanged from 2025 (IRS Rev. Proc. 2025-32). The top rate on amounts above the exclusion is 40%.
- Why
- Gift and estate tax is one unified system: lifetime gifts above the annual exclusion use up the same $15,000,000 that would otherwise shelter the estate. The tax is computed on the whole taxable amount from a rate table, then a credit of $5,945,800 cancels the tax on the first $15,000,000.
- The numbers that matter
- $15,000,000Basic exclusion amount per person, deaths and gifts in calendar 2026 (IRS, Form 706 instructions rev. 07/2026)$19,000Annual gift exclusion per recipient, 2026; $38,000 from a married couple (Rev. Proc. 2025-32)40%Rate on taxable amounts over $1,000,000 in Table A, before the credit (Form 706 instructions)$5,945,800Basic credit amount for 2026, equal to the tax on $15,000,000
- Why it matters
- A couple can move $228,000 a year to three children and their spouses with no return; a $20 million estate pays $2,000,000 or $0 depending on a portability election; a gifted house carries its old basis.
- What happens nextas we saw it on 28 Oct 2026
- Rev. Proc. 2025-32 says the basic exclusion amount is adjusted for inflation for calendar year 2027 and later years; the 2027 figures come in the IRS inflation-adjustment revenue procedure, which for 2026 was published in October 2025.
The threshold doubled in 2018, drifted up with inflation, and jumped to a flat $15,000,000 in 2026 by statute.
| 2017 | 5.49e+06 |
|---|---|
| 2018 | 1.118e+07 |
| 2022 | 1.206e+07 |
| 2024 | 1.361e+07 |
| 2025 | 1.399e+07 |
| 2026 | 1.5e+07 |
Two estates of exactly $20,000,000, two surviving spouses who each died in 2026, two very different bills: one owes the Treasury $2,000,000, the other nothing. The difference is whether, when the first spouse died, somebody filed a Form 706 that did not otherwise need filing and ticked an election called portability.
That is the shape of the federal gift and estate tax in 2026. The basic exclusion amount is $15,000,000 per person, set in statute by Public Law 119-21 of July 4, 2025. The annual gift exclusion is $19,000 per recipient, per giver, per year. Above the exclusion the rate is 40%. The rest is arithmetic, and this piece walks through it with the IRS tables.
The 2026 figures, and where they come from
Rev. Proc. 2025-32, the IRS's annual inflation-adjustment document for 2026, states in section 2.14 that the 2025 law amends section 2010(c)(3) “by increasing the basic exclusion amount to $15,000,000 for calendar year 2026”, and says the amount is to be adjusted for inflation for calendar year 2027 and later years. The IRS Estate tax page, reviewed October 23, 2026, lists the threshold as $13,990,000 for deaths in 2025 and $15,000,000 for deaths in 2026. The IRS names the law as the Working Families Tax Cuts Bill, Public Law 119-21.
Section 4.42(1) of Rev. Proc. 2025-32: “For calendar year 2026, the first $19,000 of gifts to any person” are excluded from taxable gifts under section 2503. The exclusion for gifts to a spouse who is not a US citizen is $194,000 for 2026, up from $190,000. The IRS gift-tax FAQ table shows $18,000 for 2024, $19,000 for 2025 and 2026, and $38,000 per recipient from a married couple in 2026.
How the tax is computed: one rate table, one credit
The Form 706 instructions, revised July 2026, compute a tentative tax on the whole taxable amount from Table A, the Unified Rate Schedule, then subtract a credit. The same table applies to lifetime gifts on Form 709: taxable gifts in life and the estate at death are taxed on one running total.
| Taxable amount over | Not over | Tax on column A amount | Rate on excess |
|---|---|---|---|
| $0 | $10,000 | $0 | 18% |
| $10,000 | $20,000 | $1,800 | 20% |
| $40,000 | $60,000 | $8,200 | 24% |
| $100,000 | $150,000 | $23,800 | 30% |
| $250,000 | $500,000 | $70,800 | 34% |
| $500,000 | $750,000 | $155,800 | 37% |
| $750,000 | $1,000,000 | $248,300 | 39% |
| $1,000,000 | — | $345,800 | 40% |
The Form 706 instructions state for 2026 decedents: “The basic exclusion amount is $15,000,000” and “The basic credit amount is $5,945,800.” The instructions call this the applicable credit amount, “formerly unified credit amount”. For 2025 the figures were $13,990,000 and $5,541,800.
$345,800 on the first $1,000,000 plus 40% of $14,000,000 ($5,600,000) is $5,945,800, matching the published credit to the dollar. Because the credit cancels the tax on exactly $15,000,000 and every dollar above $1,000,000 is taxed at 40%, the tax on any larger taxable estate is 40% of the excess over $15,000,000.
Tentative tax: $345,800 + 40% × ($20,000,000 − $1,000,000) = $7,945,800. Less the credit of $5,945,800: $2,000,000. Shortcut: 40% × ($20,000,000 − $15,000,000) = $2,000,000. “Taxable estate” means the gross estate after deductions with no prior taxable gifts; the IRS says the filing test is the gross estate “increased by the decedent's adjusted taxable gifts”.
Spouses: the unlimited deduction and the $15 million that can be lost
Married couples have two tools; the second is easy to miss. The first is the marital deduction. The IRS estate-tax FAQ: “All property that is included in the gross estate and passes to the surviving spouse is eligible for the marital deduction.” There is no dollar cap, so a first spouse who leaves everything to the survivor owes no estate tax.
The IRS Estate tax page: since January 1, 2011, “estates of decedents survived by a spouse may elect to pass any of the decedent's unused exemption to the surviving spouse”, and “this election is made on a timely filed estate tax return”. The Form 706 instructions say the executor “can only elect to transfer the DSUE amount to the surviving spouse if the Form 706 is filed timely”: nine months from death, or within a six-month extension. An estate with no filing requirement that missed the deadline may use a late-election procedure under Rev. Proc. 2022-32 up to the fifth anniversary of death. DSUE means deceased spousal unused exclusion.
A couple holds $20,000,000. The first spouse dies in 2026 leaving everything to the survivor: marital deduction, tax $0, and the first spouse's $15,000,000 exclusion is unused. With portability, the executor files Form 706 and passes a DSUE of $15,000,000. The survivor, also dying in 2026, has $15,000,000 + $15,000,000 = $30,000,000 of exclusion against a $20,000,000 estate. Tax: $0. Without portability, the first $15,000,000 lapses and the survivor's $20,000,000 estate has $15,000,000 of exclusion. Tax: 40% × $5,000,000 = $2,000,000. Simplifications: no growth, no other deductions, no state tax, no prior gifts, both deaths in 2026.
The trap is that the first estate owes nothing and is below the filing threshold, so there is no obvious reason to file. The election exists only on the return.
Gifts: $19,000 per person, per recipient, and the five-year 529 election
The annual exclusion is per giver, per recipient, and resets every January 1. Gifts within it need no return and use none of the $15,000,000. The Form 709 instructions say a return is generally required for more than $19,000 to anyone other than your spouse; gifts to a US-citizen spouse are not reported at all.
Three children and their spouses are six recipients. Each parent gives each recipient $19,000: 6 × $19,000 = $114,000 per parent, 2 × $114,000 = $228,000 a year for the couple, $1,140,000 over five years, none of it touching the $15,000,000. That assumes each parent's gifts are their own. If one parent writes a $38,000 cheque, the Form 709 instructions say “you must file a gift tax return to split gifts with your spouse (regardless of their amount)”, and the other spouse signs the consent. No tax is due either way; the return is what makes $38,000 count as two gifts.
The 2025 Form 709 instructions say a contributor to a qualified tuition programme “may elect to treat up to $95,000 of the contribution for that person as if you had made it ratably over a 5-year period”, with the election made by checking the box on line B of Schedule A for the year of the contribution. $95,000 is 5 × $19,000; a couple can front-load $190,000 for one beneficiary. The 2026 exclusion is also $19,000, so the same arithmetic applies to 2026 contributions. Account mechanics are in the site's 529 piece.
The step-up: why a gifted house and an inherited house are taxed differently
Few estates pay estate tax; the income-tax rule attached to death affects everyone who inherits an appreciated asset. IRS Publication 551, revised December 2025, says the basis of inherited property is generally “the FMV of the property at the date of the individual's death”, FMV being fair market value. For a gift, where the value is at or above the giver's basis, “your basis is the donor's adjusted basis at the time you received the gift”.
Inherited in 2026. The heir's basis becomes $800,000; a sale at $800,000 gives a gain of $0, and the $650,000 of appreciation is never taxed as income. Estate tax: none, as $800,000 is far below $15,000,000. Gifted during life. The basis stays at $150,000. A sale at $800,000 gives a taxable gain of $800,000 − $150,000 = $650,000: $97,500 of federal tax at the 15% long-term rate, $130,000 at 20% (rates from IRS Topic 409; which rate applies depends on income, see the capital gains piece). Gift tax: $800,000 − $19,000 = $781,000 of taxable gift, reported on Form 709, reducing the giver's remaining exclusion to $14,219,000. No gift tax is paid unless lifetime taxable gifts pass $15,000,000.
What it means for your money
Three pieces of arithmetic cover most households.
- Under $15,000,000 per person, or $30,000,000 per couple with portability, there is no federal estate tax to plan around. The question is basis: an inherited account, house or fund gets a new basis at the date-of-death value; a gifted one keeps the old one, and the embedded gain from compound growth comes with it.
- The annual exclusion is the lever that costs nothing. $19,000 per recipient per giver, $38,000 per couple, $228,000 a year across six recipients, and $95,000 per giver per child through a 529 front-load. None of it needs a return if each giver stays within their own $19,000.
- For the few estates above the line, the Form 706 after the first death is the whole game. Filing it when nothing is owed preserves up to $15,000,000 of exclusion, worth up to $6,000,000 of tax at 40%. Missing it and the five-year late-election window loses that permanently.
None of this says what anyone should do; gifts are irrevocable, and a house that is also the giver's home has further rules not covered here. The 2027 figures, including the first inflation adjustment of the $15,000,000, come in the IRS revenue procedure that for 2026 appeared in October 2025; how such adjustments are computed is in the brackets piece.
Sources
- Rev. Proc. 2025-32, inflation adjustments for taxable years beginning in 2026 (sections 2.14, 4.42)Internal Revenue Service · Oct 27, 2026 · Primary source
- Estate tax (filing thresholds by year of death; portability election), page reviewed October 23, 2026Internal Revenue Service · Oct 27, 2026 · Primary source
- What's new — Estate and gift tax (Public Law 119-21; 2026 basic exclusion amount and annual exclusion)Internal Revenue Service · Oct 27, 2026 · Primary source
- Instructions for Form 706 (Rev. July 2026): Table A Unified Rate Schedule, basic exclusion and credit amounts, DSUE/portabilityInternal Revenue Service · Oct 27, 2026 · Primary source
- Instructions for Form 709 (2025): who must file, gift splitting, section 529 five-year election, annual exclusionInternal Revenue Service · Oct 27, 2026 · Primary source
- Frequently asked questions on gift taxes (annual exclusion by year; marital deduction; who pays), page reviewed July 23, 2026Internal Revenue Service · Oct 27, 2026 · Primary source
- Frequently asked questions on estate taxes (marital deduction; portability election; due date), page reviewed July 23, 2026Internal Revenue Service · Oct 27, 2026 · Primary source
- Publication 551, Basis of Assets (Rev. December 2025): inherited property and property received as a giftInternal Revenue Service · Oct 27, 2026 · Primary source
- About Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, page reviewed October 6, 2026Internal Revenue Service · Oct 27, 2026 · Primary source
- About Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, page reviewed March 31, 2026Internal Revenue Service · Oct 27, 2026 · Primary source
- Topic no. 409, Capital gains and losses (0%, 15%, 20% rates, tax year 2025), page reviewed September 24, 2026Internal Revenue Service · Oct 27, 2026 · Primary source
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