2026 Estate & Gift Tax Exemptions: What Attorneys and Clients Need to Know
- Brian Qualls
- 3 days ago
- 3 min read
Introduction
Estate planning always hinges on federal transfer tax laws, and 2026 brings important updates. With the enactment of the One Big Beautiful Bill Act (OBBBA) in 2025, Congress permanently raised the lifetime estate and gift tax exemptions — creating a significant planning opportunity for attorneys and clients. This post breaks down the updated exemptions for 2026, GST planning considerations, and practical strategies to minimize transfer taxes.
2026 Federal Estate & Gift Tax Exemptions: Key Numbers
Unified Lifetime Estate & Gift Tax Exemption
2026 exemption: $15,000,000 per individual.
For married couples with proper planning, the combined exclusion can effectively be $30,000,000.
This exemption applies to federal estate and gift taxes, but not to the GST exemption.
The OBBBA made these higher exemptions permanent and indexed for inflation.
Why this matters: Without this change, the exemption could have reverted to roughly $5 million in 2026, dramatically increasing estate tax liability.
Annual Gift Tax Exclusion
The annual gift tax exclusion remains $19,000 per recipient in 2026.
Married couples can elect gift‑splitting to gift $38,000 per recipient without using any lifetime exemption.
Direct payments for tuition or medical expenses remain fully excluded from gift tax rules.
Generation-Skipping Transfer (GST) Tax Exemption
The GST exemption also increases to $15,000,000 per individual, matching the lifetime estate and gift exemption.
Important distinction: Unlike the estate and gift tax exemption, portability does not apply to the GST exemption. Each individual’s GST exemption is separate, and unused GST exemption cannot be transferred to a surviving spouse.
This distinction is critical for multigenerational wealth planning.
Federal Tax Rates Still Apply
The top federal estate, gift, and GST tax rate remains 40% on amounts exceeding the exemption.
Proper planning is essential to ensure clients maximize exemptions and minimize taxable transfers.
Top Estate Planning Considerations for 2026
1. Reassess Lifetime Gift Strategies
High‑net‑worth clients who previously used their 2025 exemptions (e.g., $13.99M) can now take advantage of the additional $1.01M per person in 2026.
Planning tip: Consider gifting additional assets now to freeze future appreciation outside the taxable estate.
2. Review Annual Exclusion Opportunities
Using the $19,000 annual exclusion remains one of the simplest ways to reduce taxable estates over time.
Implementation ideas:
Gift directly to multiple beneficiaries each year.
Combine with 529 plan “superfunding” strategies (five‑year election) to accelerate education gifting.
3. GST Planning for Multigenerational Transfers
With the increased GST exemption, clients can shift significant assets to benefit grandchildren and further generations.
Key point: Because portability does not apply, each spouse should consider allocating GST exemption for trusts or lifetime gifts.
Popular strategies:
GST-exempt irrevocable trusts to maximize tax-free wealth transfer.
4. Portability and Marital Planning
Portability continues to allow a surviving spouse to use the deceased spouse’s unused estate and gift tax exemption, but it does not extend to GST exemption.
Action steps after the first spouse's death:
File Form 706 timely to preserve portability.
5. Track Gifts with Form 709
Clients must file Form 709 for gifts exceeding the annual exclusion or using any lifetime exemption.
This preserves records of lifetime exemption usage and ensures proper reporting for future estate planning.
Common Planning Pitfalls to Avoid
Confusing portability with GST exemption: Portability cannot be used to increase GST coverage.
Failing to file Form 706: Surviving spouses may lose valuable unused exemptions.
Conclusion
The 2026 increase in the federal estate and gift tax exemption to $15 million per individual creates substantial planning opportunities. By leveraging annual exclusions, lifetime gifting, GST planning, and proper portability elections, clients can maximize wealth transfer by minimizing taxes.