For years, families with significant wealth have been quietly racing a clock. The federal estate and gift tax exemption was scheduled to roughly cut in half at the end of 2025, dropping back to around $7 million per person. That looming deadline shaped a lot of estate planning conversations.
Then Congress changed the rules. The One Big Beautiful Bill Act, signed into law on July 4, 2025, replaced the cliff with a permanent, higher exemption. Starting January 1, 2026, one person can transfer up to $15 million during life or at death without federal estate or gift tax. For a married couple, that figure climbs to $30 million.
So what actually changed, and what stayed the same?
What the New Law Does
The exemption is set at $15 million per individual and $30 million per married couple as of January 1, 2026, up from $13.99 million per person in 2025.¹
It is "permanent." That word matters. The 2017 Tax Cuts and Jobs Act had a built-in sunset that would have triggered the cutback at the end of 2025. The new law removed that sunset entirely. A future Congress could still pass legislation to change the exemption, but there is no automatic expiration date anymore.
The exemption will be indexed for inflation starting in 2027, so it should keep climbing.
The generation-skipping transfer (GST) tax exemption is also set at $15 million, which opens more room for transfers to grandchildren and later generations.²
The top federal estate, gift, and GST tax rates remain at 40%.²
The step-up in basis at death is unchanged. Heirs who inherit appreciated assets still receive a new cost basis equal to fair market value on the date of death, which can erase decades of unrealized capital gains.
What Did Not Change
The annual gift exclusion is still $19,000 per recipient in 2026. A married couple splitting gifts can give $38,000 per recipient without using any of the lifetime exemption.¹
Portability between spouses is still available. A surviving spouse can claim the deceased spouse's unused exemption (often called DSUE) by filing a timely federal estate tax return.
For gifts to a non-U.S. citizen spouse, the 2026 annual exclusion rises to $194,000.¹
And here in Wisconsin, the state still imposes no estate tax and no inheritance tax, which keeps the in-state analysis relatively clean.³
Why This Matters for High Net Worth Families
The old strategy for many wealthy families was urgency. Make big gifts to lock in the high exemption before it disappears. Use it or lose it.
That pressure is gone.
For households with a net worth comfortably below $15 million for single households or $30 million for married households, the federal estate tax is no longer a meaningful concern for most. Planning energy can shift toward things like income tax efficiency, charitable giving, beneficiary coordination, and clean wealth transfer.
For families well above those thresholds, the work is far from over. The 40% top rate still applies to amounts above the exemption. Tools like irrevocable trusts, GRATs, family limited partnerships, and spousal lifetime access trusts (SLATs) continue to do real work for larger estates.
For families anywhere near the line, the right move is usually a careful review rather than a sudden change.
A Word About State-Level Taxes
The new federal numbers do not erase state-level estate or inheritance taxes. Several states and Washington D.C. still impose them, sometimes at thresholds far below the federal exemption. If you own a vacation home, rental property, or business interests in another state, that exposure deserves attention.
Wisconsin residents have it easier on the state side, but neighbors do not. Illinois imposes its own estate tax on estates above $4 million. Minnesota's threshold is even lower. A lake house in either state, or rental property, or a stake in an out-of-state business can pull part of an estate into a different tax regime.
What "Permanent" Actually Means
Tax laws are only as permanent as the next Congress wants them to be. The OBBBA removed the automatic sunset that was baked into the prior law. That is real progress for planning certainty.
It does not mean the exemption cannot change again. A future administration and Congress could pass legislation that raises, lowers, or restructures the exemption. The current law just no longer has an expiration date built in.
That is one reason periodic estate plan reviews still make sense, even when the law feels settled.
This content is for educational purposes only and should not be considered tax, legal, or investment advice. Dreyer Wealth Management does not provide tax or legal advice. Please consult your tax professional and estate planning attorney before acting on any information in this article. Information is current as of May 2026 and is subject to change with future legislation.
Sources
- Internal Revenue Service, "IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill," Revenue Procedure 2025-32, October 9, 2025. https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
- One Big Beautiful Bill Act, Public Law signed July 4, 2025, amending Internal Revenue Code Section 2010(c)(3).
- Wisconsin Department of Revenue, Estate Tax information (Wisconsin imposes no state estate or inheritance tax for decedents dying after December 31, 2007).