Families with estates worth up to $15 million can now pass that wealth to heirs without owing a dollar in federal estate tax, after Congress locked in a higher exemption that had been set to expire. Public Law 119-21, signed on July 4, 2025, made the elevated threshold permanent and raised the basic exclusion amount from $13.99 million in 2025 to $15 million for calendar year 2026. The change removes years of uncertainty that had driven wealthy households to rush asset transfers before a scheduled sunset that would have cut the exemption roughly in half.
Why the $15 million estate-tax threshold changes planning right now
Before this law, the higher exemption created by the 2017 Tax Cuts and Jobs Act was temporary. It was scheduled to revert to roughly $7 million per person after 2025, a cliff that forced estate planners and their clients into urgent decisions about irrevocable trusts, family limited partnerships, and large lifetime gifts. That pressure is gone. The Congressional Research Service confirms that P.L. 119-21 made the TCJA-era estate and gift tax increase permanent and set it at $15 million for 2026.
With permanence comes a different calculus. When the exemption was temporary, families had a strong incentive to use it quickly through lifetime gifts, locking in the higher threshold before it disappeared. Now that the exemption is here to stay, the rush to gift assets before a deadline evaporates. The hypothesis that permanent higher exemptions would shift more high-value transfers into lifetime gifting strategies may actually work in reverse: families can afford to wait, plan more deliberately, and potentially hold assets until death, when heirs receive a stepped-up cost basis that eliminates capital gains on decades of appreciation. Future IRS gift-tax filing volumes for 2026 and beyond will be the clearest test of whether this shift plays out.
IRS guidance and the unified $15 million exclusion
The IRS has already updated its operational guidance to reflect the new law. The agency’s online estate-tax page now lists $15,000,000 as the 2026 filing threshold, meaning executors must file Form 706 only when a gross estate plus adjusted taxable gifts exceeds that amount. The same $15,000,000 exclusion applies to lifetime gifts because the estate and gift tax systems share a unified credit. In its gift-tax FAQ, the IRS explains that the basic exclusion amount covers both taxable gifts during life and the estate at death, with transfers above that level subject to a top federal rate of 40 percent.
According to the agency’s more technical guidance in the Internal Revenue Bulletin, P.L. 119-21 amends Section 2010(c)(3) of the Internal Revenue Code by increasing the basic exclusion amount to $15,000,000 for gifts made and estates of decedents dying in calendar year 2026. That bulletin also confirms that the higher amount is fully integrated into the unified credit calculation, so taxpayers who have already used part of their exclusion through earlier gifts simply subtract those amounts from the new $15 million ceiling.
A married couple can combine their exemptions through a mechanism called portability, effectively shielding up to $30 million from federal estate and gift tax without any trust planning at all. When the first spouse dies, the survivor can elect to add any unused exclusion to their own, preserving the full combined amount. That figure dwarfs the exemption levels that existed before 2018, when the per-person threshold sat near $5.5 million and more families had to consider complex structures such as credit-shelter or bypass trusts just to avoid federal tax.
Conflicting signals on inflation indexing after 2026
One unresolved tension sits in the fine print. The Congressional Research Service describes the exemption as “$15 million for 2026 indexed for inflation,” suggesting the threshold will continue climbing in future years as prices rise. Under that reading, the $15 million figure would serve as a base year amount, with subsequent annual adjustments preserving the real value of the exclusion over time and preventing stealth tax hikes driven by inflation.
But the IRS Internal Revenue Bulletin takes a narrower view. In its discussion of the basic exclusion amount, the bulletin focuses on the statutory $15,000,000 figure for calendar year 2026 and does not expressly project or quantify inflation adjustments for 2027 and beyond. Read literally, that language could be interpreted as locking in a flat nominal threshold, at least until Congress or the Treasury Department issues additional guidance. The absence of explicit indexing tables after 2026 has already prompted estate planners to flag the issue for clients with rapidly appreciating assets.
For now, practitioners are operating under a split-screen assumption: that the statutory structure still allows for inflation indexing, but that the precise post‑2026 amounts will depend on how the IRS ultimately reconciles its technical guidance with the CRS description. If the exemption is indexed, families just under the $15 million line today may drift safely below the filing threshold in a few years without additional planning. If it is effectively frozen, more estates could be pushed into taxable territory over time solely because of asset growth and general price increases.
Either way, the core planning message has shifted. The permanence of the $15 million exemption removes the immediate “use it or lose it” pressure that dominated estate conversations in the years leading up to 2025. Instead, advisers are urging high‑net‑worth families to revisit their plans with a focus on flexibility: coordinating lifetime gifts with income‑tax considerations, weighing the benefits of basis step‑up against potential future estate tax, and monitoring how the IRS ultimately clarifies the indexing question. Until that clarification arrives, the new law delivers certainty at the headline level, but leaves a key technical detail unresolved for the decade ahead.
