Estate and Gift Tax After 2025: The $15 Million Exemption Is Permanent
Part of our 2025 Tax Law Changes guide — the complete breakdown of the One Big Beautiful Bill Act.
Estate planners spent years preparing clients for a January 1, 2026 “sunset” that would have cut the federal estate and gift tax exemption roughly in half. The 2025 One Big Beautiful Bill Act removed that cliff, setting the exemption at approximately $15 million per person (indexed for inflation) and making it permanent.
What changed
- The exemption no longer drops after 2025; it is now a stable, indexed figure.
- Portability of a deceased spouse’s unused exemption (the DSUE) continues, so a married couple can shield roughly twice the individual amount with proper elections.
- The generation-skipping transfer (GST) tax exemption tracks the higher figure.
How planning shifts
The pressure to make large lifetime gifts before a 2026 deadline is gone. For many families who are no longer near the threshold, the focus moves from estate-tax avoidance to income-tax basis planning — keeping appreciated assets in the estate to capture the step-up in basis at death rather than gifting them away.
For ultra-high-net-worth families still above the exemption, the core techniques remain relevant: credit-shelter and marital trusts, valuation discounts, GRATs, and dynasty/GST planning. But the calculus is calmer without a looming deadline.
Do not forget the states
A number of states impose their own estate or inheritance taxes with exemptions far below the federal amount and no portability. A family well under the federal threshold can still face a state-level bill, so domicile and state exposure remain part of any complete plan.
This article is educational and current as of its publication date. Federal tax provisions — including dollar thresholds, phase-outs, and effective dates — change frequently and many items described here are temporary. Confirm the current statute, IRS guidance, and your client’s facts before relying on any point below. This is not legal or tax advice.
