The 2026 Estate Tax "Sunset" - Repealed: What Happened and What's Permanent Now
The Tax Cuts and Jobs Act doubled the federal estate tax exemption in 2018, and that doubling was scheduled to "sunset" after December 31, 2025. The One Big Beautiful Bill Act, signed July 4, 2025, repealed the sunset before it took effect and set a permanent $15 million exemption instead.
What Was the Sunset, and Why It No Longer Applies
The Tax Cuts and Jobs Act (TCJA) of 2017 temporarily doubled the federal estate and gift tax exemption - from roughly $5.5M per person to about $11M, then indexed for inflation. For 2025, the exemption was $15.00M per person ($30.00M for married couples with portability).
Under the TCJA as originally written, those elevated amounts were set to "sunset" after December 31, 2025, reverting to pre-TCJA levels, roughly $7M per person, inflation-adjusted. That reversion is what commentators called the "2026 estate tax sunset."
The sunset never took effect. The One Big Beautiful Bill Act (Pub. L. 119-21), signed into law July 4, 2025, repealed the scheduled sunset and set the federal estate and gift tax exemption to a permanent $15,000,000 per individual ($30,000,000 for married couples through portability), effective January 1, 2026, indexed for inflation thereafter. The top federal estate tax rate remains 40%, and portability between spouses remains in place.
Who Is Affected by the Permanent $15M Exemption?
| Estate Size | 2025 ($13.99M exemption) | 2026+ ($15M permanent) |
|---|---|---|
| Under $13.99M | No federal tax | No federal tax |
| $13.99M–$15M | Pays on amount over $13.99M | No federal tax |
| Over $15M | Pays on amount over $13.99M | Pays on amount over $15M |
| Married couple (combined) | $27.98M exempt | $30M exempt |
Estate Planning Strategies That Still Matter
The pre-2026 "use it or lose it" pressure is gone now that the exemption is permanent. Even so, these tools remain relevant for larger estates, for state-level estate and inheritance taxes, and for non-tax goals such as asset protection and orderly succession.
Lifetime Gifting (Anti-Clawback Protection)
The IRS confirmed in 2019 that gifts made using a higher exemption are not retroactively taxed at death if the exemption later decreases. With the exemption now a permanent $15M, no decrease is scheduled, but lifetime gifting still removes future appreciation from a taxable estate.
Spousal Lifetime Access Trust (SLAT)
An irrevocable trust funded with gifts that removes assets from your estate while allowing your spouse to receive distributions. A common tool for married couples wanting to use exemption without losing all access.
Grantor Retained Annuity Trust (GRAT)
An irrevocable trust where you retain an annuity payment for a set term. If assets grow faster than the IRS hurdle rate, the excess passes to beneficiaries estate-tax-free, even using minimal exemption.
Charitable Remainder Trust (CRT)
Provides income to you or a beneficiary for a term, then the remainder goes to charity. Provides charitable deduction and removes assets from your estate while you retain an income stream.
Annual Exclusion Gifting
You can give up to $18,000 per person per year (2024) completely tax-free and exempt-free. For a couple with 4 children and 8 grandchildren, that's $216,000/year out of the estate with no paperwork.
State Estate Tax: Often Overlooked
Even if your estate stays below the federal threshold, 13 states and DC impose their own estate tax - sometimes at exemptions as low as $1M. See our state comparison and use the calculator to estimate your combined burden.
Frequently Asked Questions
What happened to the 2026 estate tax sunset?
The Tax Cuts and Jobs Act of 2017 temporarily doubled the federal estate and gift tax exemption, and that doubling was scheduled to "sunset" after December 31, 2025, reverting to roughly $7 million per person. The One Big Beautiful Bill Act (Pub. L. 119-21), signed July 4, 2025, repealed that sunset before it took effect. There is no longer a 2026 drop.
Is the $15 million exemption permanent?
Yes. The One Big Beautiful Bill Act set the federal estate and gift tax exemption to $15 million per individual ($30 million for married couples through portability), effective January 1, 2026, with no expiration date. The amount is indexed for inflation in later years. Congress could still change the law in the future, as it can with any statute.
Do I still need to do anything before the end of 2025?
The pre-2026 "use it or lose it" urgency is gone, because the exemption rose to $15 million rather than dropping. That said, estate planning still matters for larger estates, for state-level estate and inheritance taxes, and for non-tax goals like asset protection and succession. Consult a qualified estate planning attorney about your situation.
Is there a "clawback" if I made large gifts under the higher exemption?
No. The IRS issued anti-clawback regulations in 2019 confirming that gifts made under a higher exemption are not retroactively taxed at death if the exemption later decreases. Because the One Big Beautiful Bill Act raised the exemption to a permanent $15 million, no decrease is currently scheduled, but the anti-clawback rule remains the IRS position.
What to Do Now
With the exemption now a permanent $15 million per individual, the old year-end deadline pressure is gone. Estate planning is still worthwhile for larger estates, for the 13 states (and DC) that levy their own estate tax, and for non-tax goals like asset protection and succession. If your estate is sizable or spans a state with its own estate tax, consult a qualified estate planning attorney about your situation.