- within Tax topic(s)
- with Senior Company Executives, HR and Finance and Tax Executives
- in India
- with readers working within the Accounting & Consultancy and Insurance industries
Higher Limits, Lower Stress: Understanding the 2026 Estate and Gift Tax Rules
As we move forward into 2026, the landscape of estate planning has shifted significantly. With the enactment of the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, local families and business owners have been granted new opportunities to preserve wealth.
At Johnson Pope, we believe in “laying a solid foundation for the future”. While the headlines focus on higher numbers, the real value lies in understanding how these rules apply to your specific family dynamics and assets. Below, we answer the most pressing questions regarding the new 2026 tax landscape.
What Is The Federal Estate Tax Exemption Limit For 2026?
The biggest news for 2026 is a substantial increase in the amount you can pass to your heirs tax-free. As of January 1, 2026, the federal estate and gift tax exemption, as well as the generation-skipping transfer (GST) tax exemption, has increased to $15,000,000 per person. This is a substantial increase from the 2025 limit, which was $13.99 million per person.1
For married couples, this creates a massive planning window. With proper planning, a married couple may now transfer up to $30 million total, free from federal gift, estate, and GST tax. Importantly, the OBBBA has made these increases permanent (unless changed by a future Congress) and provides for annual indexing based on inflation.2
Does your current estate plan take advantage of this increased $30 million threshold? Contact our experienced estate planning attorneys today to ensure your plan is optimized for these higher limits.
How Much Money Can I Gift To Family Members Tax-Free In 2026?
For those looking to transfer wealth during their lifetime, the rules regarding annual gifting remain favorable.
For tax year 2026, the annual gift tax exclusion remains at $19,000 per recipient. This means you can give up to $19,000 to any single individual (child, grandchild, or friend) during the calendar year without using any of your lifetime exemption.3
If you are married, you can effectively double this impact. By electing “gift splitting” on a gift tax return (Form 709), a married couple can give a combined $38,000 per recipient.
Are Gifts To My Spouse Subject To Federal Gift Tax?
Generally, gifts between spouses who are both U.S. citizens are unlimited and do not trigger gift tax. However, the rules differ if your spouse is not a U.S. citizen.
For calendar year 2026, the annual exclusion for gifts to a spouse who is not a citizen of the United States has increased to $194,000, up from $190,000 in the previous year. Gifts exceeding this amount must be carefully reported and planned for to avoid unintended tax consequences.
Can I Move Assets Out Of My Estate But Still Access Them?
One of the most powerful tools available to married couples under the current law is the Spousal Lifetime Access Trust (SLAT).
With the federal exemption now at $15 million per person, many clients worry that gifting large amounts to remove them from their taxable estate means losing access to those funds forever. A SLAT solves this dilemma. One spouse (the donor) transfers assets into an irrevocable trust for the benefit of the other spouse (the beneficiary).
Because the beneficiary spouse can receive distributions from the trust, the couple retains indirect access to the wealth while the assets, and importantly, their future appreciation, are removed from the donor’s taxable estate. This strategy is particularly effective for locking in the current high exemption amounts before any future legislative changes occur.
A SLAT requires careful drafting to avoid IRS “reciprocal trust” pitfalls. Contact Johnson Pope to determine if this strategy fits your family’s asset protection goals.
What Happens If The Tax Exemption Limit Goes Down In The Future?
A common fear among clients is the “clawback” risk: If you gift $15 million now, but the exemption is lowered in future years, will your estate be penalized?
The IRS has finalized “anti-clawback” regulations to address this specific concern. These rules clarify that if you make valid, completed gifts that are covered by the higher exemption amount in effect at the time of the gift, your estate will not be penalized if the exemption amount is lower at the time of your death. Essentially, you can “lock in” the $15 million exemption by using it now, without fear that the IRS will “claw back” the tax benefit later.4
Does Florida Have A State Estate Or Inheritance Tax?
One of the great advantages of living in the Clearwater, St. Petersburg, and Tampa Bay areas is our state tax climate. Florida is among the states with no state estate tax or inheritance tax.5
However, many of our clients own vacation homes or investment properties in other states. It is critical to note that while the federal exemption has risen to $15 million, many states maintain their own estate taxes with much lower exemption thresholds. For example:
- Illinois: Exemption remains $4,000,000.
- Massachusetts: Exemption remains $2,000,000.
- New York: Exemption is $7,350,000, with a “tax cliff” that can tax the full value of the estate if it exceeds the exemption by a certain percentage.
If you are domiciled in Florida but own real estate in these jurisdictions, your estate could still face significant tax liability.
Do you own property outside of Florida? Let the experienced estate planning lawyers at Johnson Pope review your multi-state assets to mitigate potential out-of-state tax exposure.
Will My Heirs Have To Pay Capital Gains Tax On Inherited Assets?
While avoiding estate tax is a primary goal, income tax planning is equally important. The 2026 rules have preserved the “step-up in basis” for inherited assets.6
This means that when your heirs inherit assets (such as real estate or stocks), the cost basis of those assets is adjusted to their fair market value on the date of your death. This eliminates the capital gains tax liability on any appreciation that occurred during your lifetime.
For example, if you bought a property for $500,000 and it is worth $2 million when you pass away, your heirs can sell it for $2 million without owing capital gains tax on that $1.5 million of growth. This creates a critical planning tension: it may sometimes be better to hold highly appreciated assets until death to get the step-up, rather than gifting them during your lifetime.
Balancing estate tax reduction with income tax mitigation requires a nuanced approach. Let the attorneys at Johnson Pope analyze your portfolio to maximize your family’s net inheritance.
Do I Still Need An Estate Plan If My Net Worth Is Under $15 Million?
This is the most common misconception we encounter. While the higher federal exemption ($15 million) might reduce the number of estates subject to federal taxes, a comprehensive estate plan addresses far more than just tax liabilities.
You should review and potentially update your plan for these essential non-tax objectives:
- Guardianship: Designating guardians for minor children.
- Digital Assets: Managing the transfer of online accounts, cryptocurrency, and intellectual property.
- Healthcare Directives: Ensuring your Living Will and Durable Power of Attorney reflect your current wishes regarding medical treatment.
- Family Dynamics: Addressing changes such as marriage, divorce, or the birth of children.
Furthermore, the individuals you previously appointed as executors or trustees may no longer be suitable due to age, health, or location.
Don’t Leave Your Legacy To Chance.
The 2026 tax rules offer “higher limits” and potentially “lower stress,” but only if your legal documents are up to date. The federal estate tax rate remains at 40% for amounts exceeding the exemption, meaning the cost of failing to plan remains high.
Footnotes
1 IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill, IRS (last visited Jan. 21), https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill.
2 Id.
3 Id.
4 Estate and Gift Tax FAQs, IRS, Estate and Gift Tax FAQs | Internal Revenue Service.
5 Florida Estate Tax, Florida Department of Revenue (last visited Jan. 21), https://floridarevenue.com/taxes/taxesfees/Pages/estate_tax.aspx.
6 One Big Beautiful Bill Act:
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]