A new federal law, the One Big Beautiful Bill Act, has changed the federal gift and estate tax exemption limits, effective January 1, 2026. This act prevents a planned reduction in the lifetime estate and gift tax exemption that was scheduled under the Tax Cuts and Jobs Act.
Key changes for 2026
- Lifetime estate and gift tax exemption: The law sets the federal exemption at $15 million for an individual, or $30 million for a married couple. This is the amount a person can transfer during their lifetime or at death without incurring federal estate or gift tax. The exemption amount is expected to adjust for annual inflation.1
- Annual gift tax exclusion: The annual amount an individual can give to any number of recipients without paying gift tax remains at $19,000 per person. A married couple can combine their exclusions to give up to $38,000 per recipient.1
- Sunset provision removed: The previous provision that would have reduced the lifetime exemption to approximately $7 million per person in 2026 is no longer in effect.1
Considerations for estate planning
These federal updates can offer new opportunities for long-term estate planning. Individuals can use the higher exemption limits to make substantial gifts now. This can potentially remove future asset appreciation from their taxable estate.
It is important to note that these changes apply only to federal estate and gift taxes. This federal law does not affect state-level estate or inheritance taxes, which may still apply.
With new legislation on the horizon, consider reviewing and updating your existing estate plans. Talk to your Federated Insurance® marketing representative to assist in connecting with an independent attorney who specializes in estate planning.
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1. “IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill.” IRS. https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill. Published October 9, 2025. Accessed November 14, 2025.
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