Estate, Gift & GST in 2026 and Beyond: Permanent Higher Exemption, Key Timelines & Portability (U.S. Individuals)
Updated for 2025–2026 planning • Audience: Individual U.S. taxpayers and families
Quick Take
- Permanent higher lifetime exemptions begin January 1, 2026: $15,000,000 per person for estate, gift, and GST (indexed after 2026). Married couples can generally shield up to ~$30,000,000 with proper planning.
- Top transfer tax rate unchanged: 40% on transfers above your available exemption.
- Portability stays: a surviving spouse can use a deceased spouse’s unused estate/gift exemption if a timely Form 706 is filed. (GST exemption is not portable.)
- Action now: confirm titling/beneficiaries, consider lifetime gifts, and put a portability “safety return” on your checklist whenever a spouse dies—even if no tax is due.
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1) What’s changing in 2026?
Beginning January 1, 2026, the federal lifetime exemption for estate, gift, and GST taxes is set at $15,000,000 per individual, with annual inflation indexing thereafter. For married couples, coordinated planning can protect roughly $30,000,000 or more, depending on indexing and portability of the first spouse’s unused estate/gift amount. The 40% top federal transfer tax rate remains in place.
Annual gift exclusion (separate from the lifetime exemption): $19,000 per donee for 2025; adjusts for inflation in 2026 and later. Consider “superfunding” 529 plans via the 5-year election if appropriate.
2) Timeline & key deadlines
Now through Dec 31, 2025
- Confirm 2025 gifts and annual exclusion strategy.
- Stress-test estate plan: assets, titling, beneficiaries, trustee provisions.
- Update documents (wills, revocable trusts, POAs, health directives).
Starting Jan 1, 2026
- New $15M lifetime exemption applies to estate, gift, and GST.
- Re-evaluate gifting cadence with new inflation-indexed levels.
- Coordinate portability and GST allocations for long-term trusts.
When a spouse dies (any year)
- Form 706 due in 9 months from date of death; automatic 6-month extension available via Form 4768 (file before 9-month due date).
- If a 706 wasn’t otherwise required, many estates can still make a late portability election within five years of death under IRS simplified relief.
3) Portability: keep a spouse’s unused estate/gift exemption
Portability lets a surviving spouse use a deceased spouse’s unused estate/gift exemption (often called DSUE). To preserve it, the executor files a timely and complete Form 706 and elects portability—even if no estate tax is due.
- Deadline: 9 months from death; extend 6 months with Form 4768.
- Late relief: If no return was otherwise required, many estates can elect portability within 5 years under IRS simplified procedures.
- Ordering: For lifetime gifts, DSUE is used before your own basic exclusion.
- “Last deceased spouse” rule: If you remarry and your new spouse dies, your DSUE can change. Track usage and timing before large gifts.
Why this is critical: Portability can effectively double the exemption for married couples (e.g., ~$30M in 2026), but only if the election is made correctly and on time.
4) GST exemption: powerful—but not portable
The generation-skipping transfer (GST) exemption typically equals the estate/gift exemption each year, but it is not portable between spouses. To preserve both spouses’ GST exemptions, couples often use trusts (e.g., credit-shelter or QTIP with proper elections) and make affirmative GST allocations.
Tip: Ensure your attorney/CPA explicitly allocates GST exemption on trust funding and gift/estate filings. Without an allocation, your family may lose the long-term “dynasty” protection the GST exemption provides.
5) Numbers at a glance
| Item | 2025 | 2026 (start) | Notes |
|---|---|---|---|
| Lifetime estate/gift exemption (per person) | $13.99M | $15.00M | Indexed after 2026; couple can target ~$30M with portability + planning. |
| GST exemption (per person) | $13.99M | $15.00M | Not portable. Make allocations to trusts/descendants. |
| Top transfer tax rate | 40% | 40% | Unchanged. |
| Annual gift exclusion | $19,000 per donee | Inflation-adjusted | Consider 529 “5-year” front-loading where suitable. |
6) Planning moves for individuals & families (U.S.)
A. For married couples
- Adopt a “Use it or Port it” policy. File Form 706 to preserve DSUE whenever a spouse dies.
- Coordinate credit-shelter/QTIP trusts to preserve GST exemption while still allowing portability.
- Title assets to ensure both spouses can fully use exemptions and step-up basis opportunities.
B. For individuals with high-growth assets
- Use SLATs, IDGTs, and 501(c)(3) split-interest strategies where appropriate.
- Time gifts around valuation discounts (e.g., minority/marketability) where supported.
- Review ILIT funding if gifting premiums (annual exclusion coordination).
C. Portability hygiene
- File a complete 706 with asset schedules; sloppy filing risks loss of DSUE.
- Track DSUE usage over time; lifetime gifts consume DSUE first.
- Mind the last-deceased-spouse rule before major gifts if remarried.
D. State issues
- Several states impose separate estate/inheritance taxes with lower thresholds and no portability—coordinate documents and situs.
- Use separate state-specific planning (QTIP elections, credit-shelter sizing, residency planning).
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7) FAQs
Is there still an “anti-clawback” rule?
Yes. The IRS confirmed gifts made using higher exclusions are not penalized later if the exclusion were ever reduced—your estate computes the credit using the greater of the exclusion used for lifetime gifts or the exclusion at death. This remains a useful backstop for those who made large gifts in prior years.
What if we miss the 9-month 706 deadline?
File Form 4768 before the original due date to get a 6-month extension. If a 706 wasn’t otherwise required (no tax due), many estates can still elect portability using a simplified late filing method within five years of death (check eligibility with your preparer).
Does portability apply to GST?
No. The GST exemption is not portable. To preserve both spouses’ GST exemptions, use trusts and make explicit GST allocations during life or at death.
Will the annual gift exclusion change in 2026?
It adjusts with inflation. It’s $19,000 per recipient in 2025 and is expected to move modestly for 2026. Track the IRS announcement each fall/winter.
8) Executor & family checklist (save this)
- Engage counsel/CPA early; create an asset inventory with date-of-death values.
- Calendar the Form 706 due date (9 months) and file Form 4768 for a 6-month extension if needed.
- File a complete 706 and elect portability to capture DSUE even if no tax is due.
- For trusts, confirm GST allocations and elections (including QTIP where applicable).
- Update beneficiary designations, review step-up basis planning, and retitle assets as needed.
This guide provides general U.S. federal information for individual taxpayers. It is not legal, tax, or financial advice. State estate/inheritance taxes and individual circumstances vary widely—consult your own advisor before acting.
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