The Federal Estate Tax Exemption After the 2026 Tax Law: What Changed and What Didn’t

For years, estate planning articles carried the same warning: the generous federal estate tax exemption from 2017 was scheduled to sunset at the end of 2025, and unless Congress acted, it would roughly cut in half. Writers made it sound like a countdown clock, urging wealthy families to give away as much as they could before the door closed. Then Congress passed a new tax law in 2025, and the door did not close. It opened wider. If you have not looked at your estate plan since this change, some of what you may have heard is now out of date. For guidance on what this means for your family, contact a Bronx estate planning attorney.

The New Exemption Amount

For 2026, the federal estate and gift tax exemption is $15,000,000 per individual, or $30,000,000 for a married couple who elects portability. This is up from $13,990,000 in 2025, and it did not happen by accident. Congress made this the permanent baseline going forward, with annual inflation adjustments starting in 2027. The feared reversion to roughly $7,000,000 per person, which so many articles warned about, simply did not happen. The exemption applies to lifetime gifts and to property transferred at death under the same unified system that has existed for decades, codified at 26 U.S.C. Section 2010(c)(3).

Why “Permanent” Still Deserves a Second Look

The word “permanent” in tax law tends to make careful people a little skeptical, and for good reason. Congress can always pass a new law that changes course. Even so, unlike the 2017 increase, which came with a built-in expiration date, this one has none. For the vast majority of families, whose estates fall well under the new threshold, this change removes years of anxious “use it or lose it” pressure. You no longer need to rush large lifetime gifts out of fear that the exemption will shrink before you get around to it.

What Did Not Change

A higher federal number does not mean estate planning has become optional. New York has its own, separate estate tax with a much lower exemption, currently $7,350,000 per person for 2026, and it does not allow portability between spouses. New York also applies a “cliff,” where an estate that exceeds 105 percent of the exemption loses the benefit of the exemption entirely and is taxed from the first dollar. A family that owes nothing to the IRS can still owe a substantial amount to New York State. The tools for managing that gap, such as credit shelter trusts, lifetime gifting, and careful titling of assets, have not gone away. If your will or trust was drafted around the old exemption numbers, it may no longer reflect what makes sense for your family today.

Schedule a Confidential Consultation With a Bronx Estate Planning Attorney

None of this changes why people build an estate plan in the first place. You still want your family cared for, your wishes respected, and disputes avoided during an already difficult time. The tax rules are one part of that picture, and now is a sensible moment to revisit an older plan and confirm it still fits. Whether your estate sits well under the new federal threshold or close to the New York cliff, we can help you understand what these changes mean and put a plan in place that reflects them. Contact Cavallo & Cavallo to schedule a consultation with a Bronx estate planning attorney.

Source:

irs.gov/businesses/small-businesses-self-employed/estate-tax