How your estate will be taxed will change at the beginning of 2026. Understanding what they are and how much they apply is important for creating an estate plan. Don’t dismiss that last point because you haven’t formed a plan and have no intention of doing so; that is a separate issue. Because every adult needs a plan, this is universally applicable. However, this tax impacts individuals and families with substantial assets.
Estate Tax Changes in 2026
2026 marks a pivotal moment for estate taxes because the key aspects of the Tax Cuts and Jobs Act (TCJA) from 2017 are scheduled to expire. At the time of publication, people can benefit from an exemption of up to $12.92 million from estate and gift taxes—a figure that doubles for married couples, all thanks to the TCJA. Yet, with the sunset of these provisions at the close of 2025, these exemptions are anticipated to revert to their pre-TCJA levels. When adjusted for inflation, they will potentially shift to about $7 million per individual or $14 million per couple.
One of the more confusing elements for most people is the word reduction. Because the exemption is lowering, your tax burden could increase. Recognizing the potential for this shift is crucial for effective estate planning. In other words, the window is closing if you want to leverage the current (and more generous) exemptions. Acting now averts substantial financial implications for those with estates that may be taxable at the federal level in 2026. Seizing the current exemptions before they change benefits your estate and legacy.
What You Can Do Right Now
In the previous section, we highlighted the urgency of acting sooner, and now we must take the time to elaborate on what you can do and which steps you can take. Immediate gifting allows you to take advantage of the current exemption levels. The IRS assures that such preemptive gifting, done within the bounds of the present exemptions, will not be retroactively taxed, even if future exemptions decrease. This assurance is a safeguard, ensuring that today’s gifts remain exempt from later estate taxes, irrespective of the exemption levels at your passing.
Additionally, this strategy offers a dual benefit by potentially reducing the estate tax burden at the state level for those residing in states with their estate taxes. This protects a considerable portion of your estate from future tax liabilities. Initiating gifts early benefits future heirs and gives you confidence despite the uncertainty of what the future holds regarding taxes. For estates currently valued within the $6 to $13 million bracket, taking immediate action becomes even more critical because of the looming risk of increased taxation. Gifting before the 2026 changes can protect your estate against future tax pressures, preserving your financial legacy.
Begin Crafting a Plan That Protects Your Legacy
As 2026 draws closer, it’s essential to consider the implications of these estate tax modifications and how they impact your estate planning. A well-prepared estate plan ensures your assets are distributed as you wish while minimizing potential tax burdens. We will support and advise you if you have any additional questions regarding how the imminent tax changes affect your estate planning strategy. Book a consultation with us today to learn more about your options and how to make well-informed decisions.
Kevin Tharpe
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