The One Big Beautiful Bill was signed into law on July 4, 2025, and went into effect on January 1, 2026. The Unified Gift and Estate Tax exemption was permanently increased to $15 million per individual ($30 million for married couples) and will be adjusted annually for inflation. Gone is the threat that it would return to 2017 rates at the end of 2025. This means you can plan your estate with more certainty than in years past.
Federal Estate Tax
Here are the Federal estate tax exemptions for recent years. The tax rate for assets over the exempt amount remains at 40%.
| Year | Individual Exemption | Married Couples Exemption | Tax Rate on Excess |
| 2017 | $5.49 million | $10.98 million | 40% |
| 2018 | $11.2 million | $22.4 million | 40% |
| 2019 | $11.4 million | $22.8 million | 40% |
| 2020 | 11.58 million | $23.16 million | 40% |
| 2021 | 11.7 million | $23.4 million | 40% |
| 2022 | $12.06 million | $24.12 million | 40% |
| 2023 | $12.92 million | $25.84 million | 40% |
| 2024 | $13.61 million | $27.22 million | 40% |
| 2025 | $13.99 million | $27.98 million | 40% |
| 2026 | $15 million | $30 million | 40% |
Generation Skipping Transfer (GST) Tax
The GST tax applies to assets you leave that “skip” a generation. For example, if you leave assets directly to your grandchildren, bypassing their parents, you may have to pay a GST tax. It also applies to assets you leave to other individuals more than 37 1/2 years younger than you. The reason it exists is that Uncle Sam wants his share of taxes, just as if each generation had received its inheritance and paid the taxes on it. The GST tax is in addition to the Federal estate tax and is equal to the highest estate tax rate in effect at that time (currently 40%).
The good news is that everyone has an exemption from the GST tax. It is the same as the Federal estate tax exemption and it, too, will be adjusted annually for inflation.
Here are the Federal GST tax exemptions for recent years:
| Year | Individual Exemption | Married Couples Exemption | Tax Rate on Excess |
| 2017 | $5.49 million | $10.98 million | 40% |
| 2018 | $11.2 million | $22.4 million | 40% |
| 2019 | $11.4 million | $22.8 million | 40% |
| 2020 | 11.58 million | $23.16 million | 40% |
| 2021 | 11.7 million | $23.4 million | 40% |
| 2022 | $12.06 million | $24.12 million | 40% |
| 2023 | $12.92 million | $25.84 million | 40% |
| 2024 | $13.61 million | $27.22 million | 40% |
| 2025 | $13.99 million | $27.98 million | 40% |
| 2026 | $15 million | $30 million | 40% |
Annual Tax-Free Gifts
The amount of annual tax-free gifts remains the same in 2026, at $19,000. Each year you can make as many tax-free gifts to as many recipients as you wish, as long as the amount does not exceed the limit set by Congress. If you are married, your spouse can join you. For example, in 2026 you and your spouse together could give $38,000 to each of your three children and five grandchildren, for a total of $304,000 in tax-free gifts. You can also still give an unlimited amount for tuition and medical expenses if you make the gift directly to the educational organization or health care provider.
What This Can Mean to You and Your Estate Planning
Your estate will not have to pay Federal estate taxes if its net value (assets minus debts) is less than the exempt amount in effect at the time you die. Estimates are that the current Federal estate tax exemption rescues all but about 2,000 families from the dreaded Federal estate tax. So, for most families, this means you are free to plan your estate without having to jump through hoops to avoid estate taxes. And now, with the passage of the One Big Beautiful Bill, you don’t have to worry that the estate tax exemption will revert to 2017 rates.
Planning Tips
Here are several reasons to review your existing estate plan with your attorney—or to finally make this the year you have your estate planning done.
Beneficiary Designations for IRAs and Other Tax-Deferred Plans—If you have not yet reviewed beneficiary designations for your IRAs and other tax-deferred accounts with your attorney, this should be at the top of your estate planning review list. Stretching out distributions over a beneficiary’s life expectancy has been eliminated for most beneficiaries. Funds from inherited IRAs and other tax-deferred accounts must now be fully withdrawn, and all income taxes paid, within ten years of the account owner’s death.
There are exemptions for certain beneficiaries: 1) surviving spouses can still use the spousal rollover option and name a new beneficiary (who would be subject to the 10-year-rule when your spouse dies); 2) your minor child (whose 10-year payout period starts when the minor legally becomes an adult); 3) a chronically ill and disabled beneficiary (who must meet stringent requirements); and 4) beneficiaries who are not more than ten years younger than the account owner.
If your trust beneficiary meets the requirements to be exempt, your attorney can help you with the best way to use your tax-deferred account(s) to provide for that beneficiary. Other planning options are also available. For example, naming a trust as beneficiary will give you the most control over the proceeds and protect them from a beneficiary’s creditors and irresponsible spending. Life insurance can be used to pay the income taxes. A charitable remainder trust, a viable option for larger accounts, is exempt from income taxes and can pay your beneficiary a lifetime income.
Keeping Documents Updated for Current and Future Exemptions—Your estate plan may have been written so that an amount equal to the federal estate tax exemption goes to your children or grandchildren and the balance to your surviving spouse. With the increased exemption, this could cause a larger than intended amount to go to your children/grandchildren and a smaller than intended amount (or even zero) to your spouse.
Planning for State Taxes—Some states have their own estate/ inheritance tax, often at a lower threshold, so your estate could be exempt from the Federal estate tax but still have to pay a state tax. Your attorney can help you reduce or eliminate these taxes.
Income Tax and Asset Protection Planning—Instead of estate tax planning, your attorney may want to concentrate on income tax and/or asset protection planning.
Take Advantage of Increased Exemptions—If your estate is larger, you will want to take advantage of the increased exemptions. If you have previously used your exemptions for transferring assets during your lifetime, you now have increased exemptions and can make additional tax-free transfers and gifts.
Business Succession Planning—If you are a business owner, make sure you have a business succession plan in place for your retirement, potential incapacity, and eventual death.
Charitable Gift Planning—Increased appreciation on assets provides an excellent opportunity for charitable giving if you are so inclined.