2026 Estate Tax Planning

What changed for estate planning in 2026, and does the old “use it before it sunsets” advice still hold? The big deadline is gone. For 2026 the federal estate and gift tax exemption is $15,000,000 per person, it’s permanent, and it starts indexing for inflation in 2027. The whole industry spent years telling you to gift aggressively before the exemption got cut in half at the end of 2025. That cut isn’t coming.

What the new number means

A married couple now shields $30,000,000 from federal estate tax before a dollar is owed. If your estate sits comfortably under that, federal estate tax is not your problem, and a lot of the urgency you were sold in 2023 and 2024 evaporates. The generation-skipping transfer tax exemption, the one that lets you move money to grandchildren without an extra layer of tax, also sits at $15,000,000.

That’s the relief. Here’s the trap.

The deadline died, the better deadline didn’t

Most people read “permanent” and exhale. The expensive misread is treating permanent as forever. Permanent means until Congress changes it, and Congress changes the estate tax roughly every time control of Washington flips. Planning around a number that survives one election is not planning, it’s hoping.

The deadline that actually matters never had a date on it. It’s your own mortality and the basis question underneath it. When you gift an asset during life, your heirs inherit your original cost basis and the built-in capital gains tax that rides along with it. When they inherit it at death, the basis resets to the date-of-death value under the step-up in basis rule, and that gain disappears. So the instinct to gift appreciated assets early, the one the sunset panic encouraged, can hand your kids a capital gains bill they’d never have owed if you’d simply held the asset and let them inherit it. I’ve watched families give away low-basis stock to save an estate tax they were never going to owe, and create a tax that was entirely avoidable. That’s the step-up versus lifetime gifting decision, and at $15M exemptions it tilts hard toward holding.

If your estate is large

Above $30,000,000 as a couple, the old toolkit still earns its keep. Moving assets out of your estate, freezing their value through a grantor trust, or layering in a dynasty trust for the grandchildren can save real money, because at that level you face federal estate tax no matter what basis does. The math flips: a 40% estate tax beats a 23.8% capital gains tax, so getting appreciation out of the estate wins even at the cost of the step-up. The point is to run that comparison instead of assuming.

New York is the live wire

If you live in New York, the federal number is the wrong number to watch. For 2026 New York’s estate tax exemption is roughly $7,350,000, less than half the federal figure, and it comes with a cliff. Cross the exemption by more than 5% and you don’t just pay tax on the excess. You lose the exemption entirely and the whole estate gets taxed from the first dollar. A New York couple worth $8,000,000 thinks they’re nowhere near an estate tax problem because the federal exemption is $15M each. They’re already in New York’s crosshairs. Read the NY estate tax threshold and cliff before you do anything else.

The federal deadline you were told to fear is gone. The state cliff under your feet is not. Plan for the one that’s real.