What are the Levels for Federal Estate, Gift and Generation

What are the Levels for Federal Estate, Gift and Generation Skipping Taxes for 2026?- The high exemptions for federal estate, gift and generation-skipping taxes, now in place following the passage of the One Big Beautiful Bill Act, have created continuity. However, the need for planning has not been eliminated, says a recent article, “2026 Estate and Gift Tax Update,” from The National Law Journal.

The lifetime exemption for federal estate, gift and GST taxes is now $15 million per individual and $30 million for married couples. The Lifetime Exemption will be adjusted for inflation annually. However, OBBBA does not affect state death taxes, many of which apply at significant levels. It also does not affect inheritance taxes.

OBBBA also did not extend increases to non-U.S. individuals who are not domiciled in the United States. For them, the U.S. estate tax exemption is fixed at $60,000. International families should consult an estate planning attorney to ensure that U.S. estates and assets are properly structured to avoid or minimize tax exposure.

While the federal estate tax may no longer be a concern, estate planning has shifted its focus to asset control, protection, liquidity and family governance. Planning still needs to be done to ensure that the estate plan aligns with the family’s objectives.

What are the Levels for Federal Estate, Gift and Generation Skipping Taxes for 2026?

The annual gift tax exclusion in 2026 remains $19,000 per recipient. This amount can be gifted to as many recipients each year without using the Lifetime Exemption or requiring a federal gift tax return. A gift tax return is required to elect gift-splitting. Annual exclusion gifts are a reliable means of transferring wealth, best when used as part of a broader estate plan. These gifts are often used to pay for life insurance policies or to support intergenerational wealth transfer.

Federal portability rules are unchanged for 2026. This allows a surviving spouse to use a deceased spouse’s unused estate and gift tax exemption. This is a valuable estate planning tool that should be used even if it seems unnecessary at the time of the first spouse’s death. When used properly, it may provide the family with significant relief upon the death of the second spouse.

Portability is not automatic. To elect portability of a deceased spouse’s unused exemption (DSUE) amount, the executor or administrator of the estate must file IRS Form 706 (United States Estate and Generation-Skipping Transfer Tax Return). This form must generally be filed within nine months of death, even if no federal estate tax is due. While the IRS provides limited relief in some circumstances for late portability elections, taxpayers should not count on this, as it may be denied if filing is not done in time.

If estate planning isn’t done properly, the federal estate, gift and generation-skipping tax structure for estates and non-grantor trusts remains high, with a top marginal rate of 40%. Income tax brackets for estates and trusts are greatly compressed, reaching the highest marginal income tax rate of 37%, plus a 3.8% net investment income tax at low levels of taxable income.

Families near or above the federal exemption threshold should speak with an experienced estate planning attorney to be sure proper planning is done to protect wealth and minimize taxes. There are still opportunities to explore, especially if estate plans have not been reviewed in the past three to five years.

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What are the Levels for Federal Estate, Gift and Generation Skipping Taxes for 2026?

Reference: The National Law Journal (Feb. 10, 2026) “2026 Estate and Gift Tax Update”