Permanent $15 Million Estate Exemption Ends the Gifting Deadline, Not the Case for Gifts

Estate lawyers spent the week after July 4, 2025, recalibrating plans built around a deadline that no longer exists. The One Big Beautiful Bill Act sets the federal estate and gift tax exclusion and the generation-skipping transfer tax exemption at $15 million per person starting January 1, 2026, or $30 million for a married couple, with inflation adjustments from 2027 using 2025 as the base year, as a Goodwin alert published July 9 summarized. The scheduled drop to roughly $7 million is gone.

What changed

The 2017 tax law doubled the exemption to $10 million, indexed, which reached $13.99 million per person in 2025. It was due to fall by about half on January 1, 2026. The new law replaces that cliff with a higher indexed figure and no sunset date. The top estate and gift tax rate stays at 40%, portability of unused exemption between spouses continues, and the annual gift exclusion remains $19,000 per recipient for 2025. The IRS later confirmed the $15 million basic exclusion amount for 2026 in Rev. Proc. 2025-32.

Who is affected

For several years advisers urged clients to use the higher exemption before it shrank. Arnold & Porter noted that gifting and gift tax return filings rose dramatically in the run-up to 2026. Haynes Boone drew the new line this way: people with estates above about $7 million, or $14 million for couples, but below $15 million, or $30 million, no longer face urgency to make gifts solely to avoid losing exemption. For families at or above those levels, the calculation is different, because the exemption shelters today's value but not tomorrow's growth unless assets leave the estate.

The after-tax math

With exemptions this large, the estate tax works like a flat 40% on the amount above whatever exemption remains. Example: an unmarried individual with a $20 million taxable estate and the full $15 million exemption available owes 40% on $5 million, or $2 million.

Growth is where lifetime gifts still matter. Example: a couple worth $60 million gives $20 million of closely held company stock to a trust for their children in 2026, using their combined exemption. Suppose the shares double to $40 million by the second spouse's death.

The illustration ignores inflation adjustments, state estate taxes and the income tax trade-offs that come with giving away appreciated assets, all of which can change the result.

Moves to discuss with your advisor

• Trusts signed in a hurry. Couples who created spousal lifetime access trusts or similar vehicles to beat the 2026 deadline may want to review whether trustee choices, access provisions and funding still fit their goals.
• Growth-shifting techniques. Grantor retained annuity trusts and sales to grantor trusts, which move appreciation while using little exemption, remain relevant for estates well above $30 million. Haynes Boone notes gifts can be more effective when the donor pays the trust's income tax.
• Simplification. Couples unlikely to exceed $30 million may be able to simplify wills or living trusts drafted around estate tax formulas, according to Haynes Boone.
• Portability. A surviving spouse still needs a Form 706 filed for the first spouse, generally within nine months of death, to preserve unused exemption.
• State estate taxes. State exclusions can be far lower than the federal figure; Washington's is $3 million as of July 1.

What to watch

Permanent in tax law means no built-in expiration, not a guarantee. As Haynes Boone put it, reducing the exemption would take new legislation passed by Congress and signed by a future president. Families with multi-decade plans often build flexibility into trusts for that reason. Also watch the IRS inflation adjustment for 2027, the first computed under the new base year.

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