The $15 Million Estate Tax Exemption: What It Means for Your Family

The short answer: starting in 2026, each person can give away or leave up to $15 million without federal estate or gift tax, and a married couple can shelter up to $30 million. The 2025 tax law (Public Law 119-21, signed July 4, 2025) set that amount and removed the scheduled drop, and the IRS will adjust it for inflation starting in 2027. Anything above the exemption is taxed at up to 40%. Oklahoma has no estate tax of its own. For most families that ends the worry, but owners of growing businesses and large estates still have good reasons to plan.

What changed in the 2025 tax law

Under the 2017 tax law, the exemption (the IRS calls it the basic exclusion amount) roughly doubled for 2018 through 2025, reaching $13,990,000 for 2025. It was then scheduled to fall back to about half that level in 2026. Many families spent 2024 and 2025 rushing to make gifts before the drop.

Section 70106 of P.L. 119-21 changed course. For 2026:

• Estate and gift tax exemption: $15,000,000 per person, shared between lifetime gifts and your estate at death.
• Generation-skipping transfer (GST) exemption: $15,000,000, for gifts and trusts that benefit grandchildren and later generations.
• Inflation adjustments: both amounts will be adjusted for inflation for 2027 and later years.

“Permanent” means the law no longer has an end date built in. Congress can still change it in the future, so a good plan works under more than one set of rules.

How the estate tax works at $15 million

At death, the IRS looks at the fair market value of everything you own or control: cash and investments, real estate, life insurance you own, retirement accounts, and business interests. Debts, expenses, gifts to charity, and property passing to a surviving spouse are subtracted. Taxable gifts you made during life are added back. The exemption covers the first $15 million of that total, and the excess is taxed at rates that reach 40% on amounts over $1 million, so in practice nearly every dollar above the exemption is taxed at 40%.

The estate tax return, Form 706, is due nine months after death, with an automatic six-month extension available to file.

Portability: how married couples reach $30 million

Property left to a surviving spouse who is a U.S. citizen generally passes free of estate tax. That often means the first spouse’s exemption goes unused. Portability fixes this: the executor can elect to pass the first spouse’s unused exemption to the survivor, who adds it to their own.

The catch is paperwork. The election is made on a timely filed Form 706, even when the estate is too small to owe tax. If the estate wasn’t otherwise required to file, IRS relief allows the portability return to be filed up to the fifth anniversary of the death. The unused amount is locked in at the first death and doesn’t grow with inflation, and it doesn’t carry over to the GST exemption.

Here is a hypothetical example to show the stakes. A married couple has a $40 million estate. The first spouse dies in 2026 and leaves everything to the survivor. To keep the math simple, assume the survivor also dies in 2026 with the same $40 million.

For illustration purposes. Tax law may change, which may change these calculations slightly. In this example, filing one return at the first death saves about $6 million.

Gifts: the $19,000 annual exclusion and lifetime gifts

For 2026, you can give up to $19,000 to any number of people without using any of your $15 million exemption. A married couple who elect to split gifts can give $38,000 per recipient. Gifts to a spouse who isn’t a U.S. citizen have a separate annual exclusion of $194,000 for 2026.

Gifts above the annual exclusion are reported on Form 709 and reduce your remaining exemption, but no tax is due until lifetime gifts pass the exemption. A special rule for 529 plans lets you put five years of annual exclusions into an account at once, up to $95,000 per child from one giver, as our 529 superfunding guide explains.

Does Oklahoma have an estate or inheritance tax?

No. The Oklahoma Tax Commission states that the Oklahoma estate tax is repealed for deaths on or after January 1, 2010, and Oklahoma doesn’t have its own inheritance tax. Some other states do tax estates or inheritances, so if you own real estate in another state, that state’s rules are worth checking.

Why business owners and growing estates still plan

A $15 million exemption covers most families. It may not cover yours if:

• Your business is growing. A company worth $8 million today can be worth far more by the time you die. Growth after a gift is outside your estate; growth on assets you keep is taxed. Our guide to lifetime gifts and SLATs shows how moving growth works.
• Your heirs would need cash. Estate tax is generally due nine months after death. A family with most of its wealth in a business, farmland, or real estate may have to sell assets to pay it.
• You want control and fairness. A family limited partnership or family LLC can let you pass interests to children while keeping management, and appraised discounts may stretch your exemption.
• Income tax still applies. Assets kept until death generally get a stepped-up basis, which can erase capital gains for your heirs. Gifted assets keep your original basis. When an estate is well under the exemption, keeping appreciated assets may save more than giving them away.

Planning is also about more than tax: who runs the business, how children who work in it are treated compared with those who don’t, and how a surviving spouse is protected. Those decisions need your estate attorney, financial advisor, and tax strategist working from the same numbers.

How we help

At Cannon & Brown Tax Advisors, we coordinate with your estate attorney so the income tax and estate tax sides of your plan fit together, and we keep your numbers current as the business grows. Your tax strategist reviews every recommendation. If you’d like to see where your family stands, start with a free tax analysis.

Illustrative example. The people and figures in this article are hypothetical, used to explain how the rules work. They are not a client and not a promise of results.

This article is educational and is not tax advice for your situation. Tax law may change, which may change these rules and numbers.

Sources

• IRS: Revenue Procedure 2025-32 (2026 inflation adjustments, Sections 3.14 and 4.42)
• IRS: What’s new, estate and gift tax
• IRS: Estate tax
• IRS: Instructions for Form 706
• IRS: Estate and gift tax FAQs
• IRS: Publication 551, Basis of Assets
• Congress.gov: H.R. 1, Public Law 119-21
• Oklahoma Tax Commission: FY2024 Revenue and Apportionment Report