Federal estate tax reaches only a small share of deaths, but the number that determines who must plan for it changed in 2026. The IRS lists a $15 million basic exclusion amount for the estates of people who die this year. That figure is a federal transfer-tax threshold, not a promise that every estate below it can ignore filing, state tax, portability, or trust administration.
The $15 million amount is a federal basic exclusion
The IRS’s current 2026 tax guidance states that the basic estate-tax exclusion is $15,000,000, up from $13,990,000 for 2025 decedents. In broad terms, the exclusion allows that amount to pass without federal estate tax after accounting for lifetime taxable gifts and other adjustments.
The exclusion is measured per individual. Married couples may be able to combine the available amounts through planning and portability, but the second spouse does not automatically inherit the first spouse’s unused exclusion. The executor of the first spouse’s estate generally must make a timely portability election on a federal estate-tax return.
Lifetime gifts can reduce what remains at death. A person who used part of the transfer-tax exclusion for earlier taxable gifts may have less than $15 million available to shelter the estate. Records of gift-tax returns therefore belong in the permanent estate file rather than a yearly tax folder that may be discarded.
Free retirement updates: Want plain-English help keeping more of your money in retirement? The free Retirement Shield newsletter covers scams, benefits, and money many retirees may be owed, a couple times a week. Subscribe free.
Estate value includes more than brokerage accounts
A rough estate inventory should include real estate, business interests, retirement accounts, taxable investments, cash, valuable personal property, and life-insurance proceeds when the decedent owned the policy or retained relevant rights. Assets passing directly by beneficiary designation are not necessarily excluded from the federal gross estate merely because they avoid probate.
Valuation can be the hard part. A closely held company, farm, commercial property, or family limited partnership may require a qualified appraisal. Market movement between the planning date and death can also move an estate across a filing threshold. Families close to the line need updated values, not old purchase prices.
Deductions separate gross value from taxable value
Debts, administration expenses, charitable transfers, and qualifying transfers to a surviving spouse may reduce the taxable estate. The final calculation is therefore not simply gross asset value minus $15 million. An estate attorney and tax professional can identify which deductions apply and which assets need formal valuation.
State estate and inheritance taxes use different lines
The federal exclusion does not override state law. Some states impose estate taxes at thresholds far below the federal amount, while some impose inheritance taxes on recipients. A household can be safely under the federal line and still face a meaningful state bill.
Domicile and property location matter. A retiree who moved states but kept a former home, business interest, or unclear residency records can leave an avoidable dispute. Estate documents, driver’s license, voter registration, tax filings, and the location of important personal ties should tell a consistent story.
State rules can also affect whether lifetime gifts, trusts, or marital planning achieve the intended result. Copying a federal-only strategy from a national article is risky when a state exemption is lower or portability is unavailable.
Portability may justify filing below the tax threshold
An estate that owes no federal estate tax may still file Form 706 to elect portability of a deceased spouse’s unused exclusion. That preserved amount can protect the survivor if assets appreciate, the survivor receives an inheritance, or Congress later changes the rules. The election also supports more flexible lifetime gifting.
Portability does not replace every trust strategy. Trusts can address creditor protection, remarriage, management for children, state taxes, and control over distributions. Conversely, a complicated trust created solely for an old federal threshold may deserve review now that the 2026 amount is known.
Families should keep an updated net-worth statement, beneficiary designations, deeds, business agreements, insurance records, and prior gift-tax returns together. The planning conversation should include who will serve as executor and whether that person can access reliable valuations and tax records.
The controlling IRS figure is now settled for 2026: $15 million per individual before prior taxable gifts and other adjustments. The number removes federal estate tax from many families, but it does not remove the need to check state thresholds, portability, asset title, and the evidence an executor will need.
Form 706 turns the plan into an executor’s record
The IRS’s estate-tax overview explains the gross-estate, deductions, and taxable-estate sequence, while the Form 706 page provides the return and instructions. Executors should not rely on a spreadsheet assembled after death without supporting appraisals and account statements. The valuation date, ownership percentage, beneficiary designation, and debt attached to each asset belong in the inventory. If portability is being considered, the filing deadline and available simplified procedures need review early enough to gather signatures and valuations. The exclusion may be generous, but a missed portability election can waste protection that would have mattered after years of appreciation. Treating estate records as a permanent household archive gives the executor evidence for both tax decisions and distributions to heirs.
This article was researched and drafted with AI assistance and reviewed against the linked primary sources.
More Financial Reading
- Adding someone to your bank account: tax traps and smart moves
- What really happens to your joint savings account when you die?
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
