Estate Planning

The 2026 Estate Tax Sunset: What Actually Happened

The exemption was supposed to drop by half. Instead it went up to $15M per person, with no end date. Here's what that means for your family.

May 13, 2026

7 min read

Quick answer

No, the 2026 estate tax sunset did not happen. The One Big Beautiful Bill Act, signed July 4, 2025, set the federal estate and gift tax exemption at $15 million per person ($30 million per married couple) starting January 1, 2026. It rises with inflation and has no scheduled end date. The 40% rate above it is unchanged.

You may have heard the federal estate tax exemption was going to drop by half on January 1, 2026. That was the old plan. It did not happen. On July 4, 2025, the One Big Beautiful Bill Act was signed into law. It set the exemption at $15 million per person ($30 million per married couple) starting in 2026. The exemption is the amount you can pass to your heirs free of federal estate tax. It now rises with inflation each year, and there's no scheduled end date. So what does that mean for your family? Let's walk through it.

What was supposed to happen, and what did

The 2017 tax law roughly doubled the federal estate exemption. That increase was set to end, or sunset, after 2025. If nothing changed, the exemption would have fallen to about half. Then Congress acted. The One Big Beautiful Bill Act, signed July 4, 2025, made the higher exemption permanent and raised it.

·2025 exemption: $13.99M per person
·2026 exemption: $15M per person ($30M per married couple)
·After 2026: the amount rises with inflation each year
·Federal estate tax rate above the exemption: still 40%
·The lifetime gift tax exemption is tied to the estate exemption, so it went up too
·Annual gift exclusion for 2026: $19,000 per person you give to, same as 2025
·Michigan has no state estate tax

Does "permanent" mean forever?

Permanent means there's no end date written into the law. Congress can still change tax law in the future, like it can with any law. For now, you can plan around $15M per person without a clock running out on you.

Who still needs to think about estate tax

Most families will never owe federal estate tax at these levels. But some still will. Your estate is more than your bank account. Add up everything you own.

·Your estate includes your home, retirement accounts, investments, business value, and money owed to you
·Life insurance you own counts too. A large policy can push an estate over the line
·Business owners often guess low on what their company is worth
·If your estate is near or above $15M ($30M as a couple), planning still matters
·For large estates, tools like ILITs, SLATs, and GRATs are set up with an estate attorney. We coordinate the insurance and financial side

Married? Don't skip portability

When the first spouse dies, the unused part of their exemption can pass to the surviving spouse. This is called portability. But it isn't automatic. The family has to file a federal estate tax return, Form 706, after the first death, even if no tax is owed. Skip it and that unused exemption can be lost for good.

What matters for everyone, no matter the size of the estate

·Step-up in basis: when heirs inherit a home or stock, the cost basis resets to its value at death. That can wipe out capital gains tax if they sell. How you title and gift assets while you're alive affects this
·Probate: a will still goes through court. A living trust can skip it
·Incapacity: a durable power of attorney and healthcare directive keep a court from choosing who speaks for you
·Beneficiaries: an old beneficiary form on a 401(k) or life policy can undo the rest of your plan
·Minor or special needs children: name a guardian, and use a special needs trust so help doesn't cost a child their benefits

How we help

We help you figure out which documents your family needs. Your documents are prepared and reviewed by our document partner, Plan4TheFuture, and shipped to your door. We're not attorneys and we don't give legal advice. If your situation needs a lawyer, like a family dispute, a lawsuit, or complex trusts for a large estate, we'll tell you.

Frequently asked questions

Did the 2026 estate tax sunset happen?

No. The 2017 tax law's higher exemption was set to end after 2025. Instead, the One Big Beautiful Bill Act, signed July 4, 2025, made it permanent and raised it to $15 million per person starting in 2026.

What is the federal estate tax exemption in 2026?

$15 million per person, or $30 million for a married couple. After 2026 it rises with inflation each year. The tax rate on amounts above the exemption is still 40%. In 2025 the exemption was $13.99 million.

Is the new exemption really permanent?

It has no scheduled end date, which is what permanent means here. Congress can always change tax law later, like any law. But there is no built-in sunset like there was before.

Who still has to worry about federal estate tax?

Families whose estate is near or above $15 million per person, or $30 million as a couple. Your estate includes your home, retirement accounts, investments, business value, and life insurance you own. Michigan has no state estate tax.

What is portability, and do I need to do anything?

Portability lets a surviving spouse use the unused part of the first spouse's exemption. It is not automatic. The family must file Form 706 after the first death, even if no tax is owed, or that unused amount can be lost.

If I won't owe estate tax, do I still need an estate plan?

Yes. Estate tax is only one piece. A will or living trust, powers of attorney, healthcare directives, and up-to-date beneficiaries decide who gets what, who speaks for you, and whether your family ends up in probate court.

The Takeaway

The 2026 sunset never happened. The federal exemption is $15M per person ($30M per couple) and rises with inflation, with no end date. Most families won't owe estate tax. But every family still needs the basics: a will or living trust, powers of attorney, healthcare directives, and the right beneficiaries. And if you're married, remember portability at the first death.

Free estate planning review

Bring what you have today. We'll look at your estate under the new rules, find the gaps, and help you pick the right documents. Our document partner prepares them and ships them to your door.

Educational content only. Not financial, tax, or legal advice. Always consult a licensed professional before acting on the information in this post.