New Tax Law Expands Estate Tax Exemption to $15M, Giving Wealthy Families Bigger Break

A major provision of the newly passed One Big Beautiful Act, signed into law by President Donald Trump on July 4, will significantly increase the federal estate tax exemption, allowing wealthy Americans to transfer even more money to heirs without tax penalties.

Starting in 2026, the estate tax exemption will jump by roughly 7.2% to $15 million per person and continue adjusting for inflation annually. That’s up from the current exemption of $13.99 million in 2025. Previously, the exemption was set to revert to just over $7 million next year.

The increase means that married couples could pass on up to $30 million tax-free in 2026, thanks to the portability rule that allows spouses to combine their unused exemptions. The exemption also applies to lifetime gifts, meaning high-net-worth individuals can gift or bequeath up to $15 million (or $30 million per couple) without triggering federal taxes.

While the tax rate on estates remains unchanged — ranging from 18% to 40% — the higher exemption is expected to further reduce the number of estates subject to federal estate tax. In 2001, 2.1% of estates were taxed. By 2019, that figure had dropped to just 0.07%. Without the OBBA, that number was projected to rise to 0.2% in 2026.

According to the Joint Committee on Taxation, the change will reduce federal revenues by nearly $212 billion over the next decade compared to prior projections.

However, taxpayers should not overlook state-level estate taxes. A dozen states and the District of Columbia still impose their own estate taxes, many with much lower exemption thresholds. For example, Massachusetts exempts only $2 million, and Washington tops out at $3 million, with rates as high as 35%.

The estate tax expansion is among the many elements of the OBBA aimed at reshaping wealth and tax policy under the Trump administration’s second term — but it’s also likely to draw ongoing scrutiny for its effect on the national budget and income inequality.

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