New Estate Tax Exemptions: What You Need to Know for 2026
Discover how the new estate tax law changes impact your planning for 2026 and beyond.
As the landscape of estate planning shifts, have you considered how recent changes might affect your financial future? With the expiration of the 2017 Tax Cuts and Jobs Act looming, many were bracing for a significant drop in the federal estate tax exemption from $13.99 million to $5 million per person come January 2026. However, a new law passed on July 4, 2025, known as the One Big Beautiful Bill Act, has made some surprising updates that could benefit your planning.
The Act increases the federal unified estate and gift tax exemptions to $15 million per individual starting in 2026, with further annual adjustments for inflation beginning in 2027. This means that for many estate holders, the financial landscape has become considerably more favorable. Notably, the generation-skipping transfer tax exemption will now match the estate and gift tax exemption as well, but remember, it remains ineligible for portability elections.
What does this mean for your specific situation? If you have already engaged in major gifting or set up irrevocable trusts to maximize your exemption, it might be time to revisit those plans. With the new exemption amounts, you could potentially add more assets to those trusts. On the other hand, if your estate surpasses $15 million, it’s crucial to evaluate whether your current estate plan aligns with the latest changes.
For couples in Vermont, it’s worth noting that the state has its own estate tax exemption set at $5 million. This means that if your combined estate exceeds this amount, maintaining a two-trust strategy might still be your best bet. Conversely, if you reside in New Hampshire, where there is no state-level estate tax, you might consider simplifying your estate plan into a single trust.
As these new exemptions become effective, ensuring your assets are titled correctly and beneficiary designations are updated is vital. This proactive approach is essential in achieving your estate planning goals. If you haven’t reviewed your estate plan recently, now’s the perfect time to do so. Consider reaching out to a professional to discuss your options and make the most of these new regulations.