Until last summer, a married couple worth $30 million was staring at a potential federal estate-tax bill that could have topped $6 million. The 2017 Tax Cuts and Jobs Act had temporarily doubled the estate-and-gift-tax exemption, but that doubling was set to expire on January 1, 2026, snapping the per-person shield back to roughly $7 million. Estate attorneys spent years urging clients to move assets into irrevocable trusts before the window closed.
Then the window was removed altogether. The One Big Beautiful Bill Act, signed into law on July 4, 2025 as Public Law 119-21, set the federal estate-and-gift-tax exemption at a flat $15 million per person, made it permanent, and applied it to deaths and gifts occurring after December 31, 2025. That couple with $30 million? Their federal estate-tax exposure dropped to zero.
What the law actually changed
H.R. 1 in the 119th Congress amended Internal Revenue Code Section 2010(c)(3), replacing the old inflation-adjusted formula with a fixed $15 million basic exclusion amount for 2026 and every year after. The House committee report explains that lawmakers deliberately struck the TCJA’s sunset language and substituted a permanent dollar figure. A Congressional Research Service brief tied to Public Law 119-21 confirms that the provision both made the higher exemption permanent and raised it above the 2025 level of $13.99 million.
At the 40% top federal estate-tax rate, the math is stark. A single person whose estate would have exceeded a roughly $7 million post-sunset exemption by $8 million faced a potential tax bill above $3.2 million. That liability has now disappeared for estates at or below $15 million.
The generation-skipping transfer (GST) tax exemption was raised to the same $15 million threshold, so dynasty-trust strategies that skip a generation benefit from the higher ceiling as well. And because the new amount is fixed rather than indexed to inflation, there is no annual adjustment to track going forward, at least under current law.
How portability doubles the shield for married couples
For married couples, the critical mechanism is portability under IRC Section 2010(c)(4). When the first spouse dies, the executor can file IRS Form 706 to transfer any unused portion of that spouse’s $15 million exemption to the survivor. If neither spouse used any exemption during life, the surviving spouse ends up holding a $30 million shield that covers both lifetime gifts and bequests at death.
That $30 million figure is not a planning trick or an aggressive interpretation. It flows directly from the statute and is confirmed by the CRS analysis. But portability is not automatic. The executor must file Form 706, even if no estate tax is owed, to preserve the deceased spouse’s unused exemption. Families that skip that filing lose the benefit permanently.
How the exemption interacts with annual gifts
The $15 million figure is a lifetime ceiling that covers both gifts made while alive and assets transferred at death. It operates separately from the annual gift-tax exclusion, which the IRS set at $19,000 per recipient for 2025 under Rev. Proc. 2024-40. The IRS has not yet announced the 2026 annual exclusion figure; it typically publishes inflation adjustments in the fall of the prior year.
Married couples who elect to split gifts can give double the annual exclusion per recipient without touching the lifetime exemption at all. Families that combine consistent annual gifting with strategic use of the lifetime exemption can move substantially more than $15 million out of a taxable estate over time.
Gifts that exceed the annual exclusion must still be reported on IRS Form 709, and they reduce the donor’s remaining lifetime exemption dollar for dollar. Nothing in the OBBBA changed that reporting requirement.
What remains uncertain as of June 2026
The exemption itself is settled law, but several important gaps persist.
No official revenue score. The Joint Committee on Taxation has not released a public revenue estimate specific to the permanent $15 million exemption. Without that data, the long-term fiscal cost and the precise number of estates that drop off the taxable rolls cannot be quantified using official congressional scorekeepers. Earlier TCJA-era projections are a rough guide at best, since they predate both the higher dollar amount and shifts in household wealth since 2017.
State estate taxes still bite. A dozen states and the District of Columbia maintain their own estate or inheritance taxes, often with exemptions far below the federal level. Oregon, for example, taxes estates above $1 million. Massachusetts taxes the entire estate once it exceeds a $2 million threshold. New York’s exemption has been higher but still well under $15 million. None of the primary federal documents address whether states will raise their own exemptions to match, and as of June 2026, none have. Families in those jurisdictions may owe nothing to the IRS yet still face a six- or seven-figure state tax bill.
IRS enforcement guidance is pending. The agency has acknowledged the updated basic exclusion amount, but it has not outlined how audit resources will be allocated under the new regime. Open questions include whether the higher threshold will reduce the volume of estate-tax returns the IRS examines, how the agency will handle complex valuation disputes on large lifetime gifts, and whether Forms 706 and 709 will be simplified for taxpayers whose cumulative transfers fall well below $15 million.
Step-up in basis remains unchanged. The OBBBA did not alter IRC Section 1014, which provides that inherited assets receive a stepped-up cost basis equal to their fair market value at the date of death. That rule continues to eliminate capital-gains tax on appreciation that occurred during the decedent’s lifetime, a benefit that compounds the value of the higher exemption for heirs who plan to sell inherited property or investments.
What estate plans built for the sunset may need now
For the past eight years, estate planning for wealthy families revolved around a single question: what happens when the exemption drops? Attorneys built irrevocable trusts, accelerated gifting programs, and complex split-interest structures specifically to lock in the higher exemption before it disappeared. Now that the exemption is permanent at $15 million, many of those structures deserve a second look.
An irrevocable trust funded in 2024 to capture a $13.99 million exemption before a feared sunset, for instance, may still serve the family’s goals. But the urgency that justified its inflexibility is gone. Families whose total estates fall comfortably below $30 million may find that simpler revocable structures, or even outright gifts, now accomplish the same tax result with fewer administrative costs and more control.
Advisors should also confirm whether a client’s state of residence imposes its own transfer tax and at what threshold. A family that owes zero federal estate tax on a $20 million estate could still owe hundreds of thousands of dollars to a state like New York or Massachusetts.
The permanence of the $15 million exemption removes the single largest variable from high-net-worth estate planning. The surrounding landscape, from state conformity to IRS audit priorities to the interplay between the exemption and the step-up in basis, is still catching up. Families with estates anywhere near the threshold should treat this not as a reason to stop planning, but as a reason to plan with better information than they have had in nearly a decade.
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.
