Federal Estate Tax Exemption Increased to $15 Million for 2026

Everyone should be cognizant of legal changes that can affect their estate plans. This is especially true for high net worth families who could face significant estate tax exposure when federal or state rules change. When the federal estate and gift tax was essentially doubled in 2017, the law included a sunset provision which caused the legislation to expire in eight years. This meant that many federal tax-free estates in 2025 would face heavy levies in 2026 if Congress did not take further action. However, this threat has now passed.

Passed in early July, the federal legislation referred to as "One Big Beautiful Bill" covered a wide range of issues, including the increase in the federal estate and gift tax exemption to $15 million for 2026. Prior to the passage of this bill, the individual exemption, which is currently $13.99 million, was set to drop to a figure around $7 million on New Year’s Day.  

This increased exemption presents a valuable opportunity for estate planning. Unlike the previous measure, the current law does not have a sunset provision. Accordingly, people who are planning their estate can do so with more confidence that their strategy won’t require major changes due to a sharply reduced exemption in the future. Furthermore, starting in 2027, the exemption amount will be indexed annually to inflation, so there should be marginal increases each year.  

Along with the ability to leave a larger estate behind without worrying about federal taxation, you can also now gift larger sums during your lifetime, taking advantage of the increased exemption to minimize or eliminate tax exposure. However, Massachusetts has its own estate tax with an exemption amount of $2 million, so your overall plan should take that into account as well. 

Whether you are revisiting an existing estate plan or embarking on a new strategy, the expanded exemption is a good reason to evaluate the legal instruments you have in place to govern the disposition of your assets. Working with a qualified attorney can help you develop a program that suits your circumstances and goals. 

At Chapdelaine, Ryan & Associates in Winthrop, our experienced estate planning lawyers will advise you regarding the applicable laws and how they affect your particular situation. Please call 617-870-6728 or contact us online for a consultation.