This post provides an update on the 2026 estate tax and annual gifting limits.
Federal Unified Estate and Gift Tax Exemption
In 2026, the lifetime exemption is $15 million for an individual (up from $13.99 million), or $30 million for a married couple.
This is the amount you may give away during your lifetime and/or in death without triggering any estate or gift tax. The rate applies to anyone passing away after Dec. 31, 2025.
- If you have given away more than $15 million when you pass on, the excess is taxed at 40%.
- Federal estate tax is levied on the gross assets. Gross assets include trust assets, assets held in the decedent’s name, jointly held property, life insurance, accounts with designated beneficiaries, annuities. Therefore, do not confuse taxable estate with probate estate and vice versa.
- The most recent legislation made the $15 million exemption permanent, except for annual increases due to inflation. However, it is folly to assume any tax law is guaranteed to be permanent! Congress can change it depending on who controls Congress and the White House, and the direction in which current political winds are blowing.
- As for what your heirs inherit, no amount they receive is subject to federal income tax.
- In reality, only a miniscule number of estates are large enough to be taxable. According to the latest data from the Center on Budget and Policy Priorities, fewer than 1 in 1,000 estates are subject to federal estate tax. However, if you now have or in the future are likely to have a taxable estate, there are a variety of strategies that can be used to reduce the estate tax burden and pass as much money as possible to your heirs. These strategies include a program of gift-giving during your lifetime, charitable deductions, and more. Your estate planning attorney can advise you.
- A note for married couples: If a decedent is married, the surviving spouse may claim the unused portion of the deceased spouse’s exemption. This feature is called portability. The portability option must be exercised by the surviving spouse when the decedent’s federal estate tax return (form 706) is filed. The estate tax return must be filed in order for the surviving spouse to preserve that exemption, even if there is no current need to file an estate tax return for the decedent.
- Last, be aware that in Florida, there is no state estate tax.
Annual Estate Tax Exclusion
In 2026, the annual gift tax exclusion is $19,000 per individual, or $38,000 for married couples. This is unchanged from last year. The annual gift tax exclusion is the maximum amount you can give to any one individual without incurring federal gift tax.
- If a gift to an individual exceeds the exclusion amount, you must report it on IRS Form 709, the federal gift tax return. You may give up to $19,000 each year to as many persons as you wish without filing a gift tax form.
- Even when your gift requires filing a gift return, you will not actually owe any tax in your lifetime, nor will your estate owe any estate tax after you are gone, until your cumulative gifts, in life and death, exceed the $15 million unified federal gift and tax exemption.
- Under certain circumstances, you do not have to file a gift tax form even for a gift over $19,000. Examples: if you are paying a school directly for someone’s tuition; paying medical providers directly for someone’s medical care (long-term care premiums are considered medical care); or if your gift is to a qualifying charity.
- If you currently have or are likely to have a taxable estate when you pass away, a program of gift-giving is one strategy that you may employ to put as much tax-free money as possible in your loved ones’ pockets. Your financial planner, your certified public accountant and your estate planning attorney can provide you with guidance in this area.
- Last note: Those planning to apply for Medicaid nursing home benefits for themselves or a loved one often conflate the annual exclusion with Medicaid rules. A gift under $19,000 that does not require filing a gift tax return is still considered a gift for Medicaid purposes, if the gift is made in the five-year period prior to application. The gift will trigger a penalty period during which Medicaid benefits will be denied.
