The federal estate tax exemption will rise once again in 2026, offering significant relief for many wealthy Americans.
The increase comes as part of a sweeping spending bill signed into law on July 4, 2025, known as the Trump/GOP “Big Beautiful Bill” (BBB). This legislation permanently extended several tax provisions previously set to expire.
The 2026 Estate Tax Exemption Amounts
Thanks to both the BBB and annual IRS inflation adjustments, the estate tax exemption will increase substantially in 2026. The exemption will rise to $15 million for individuals, up from $13.99 million in 2025. For married couples, the combined exemption will double to $30 million, compared to $27.98 million for the current year.
How the Estate Tax Works
The federal estate tax applies only when a person’s taxable estate exceeds the exemption amount at death. Estates valued under the threshold owe no federal estate tax.
Because of this high exemption level, only a small percentage of estates nationwide will be affected. However, for ultra-wealthy individuals, estate taxes can still take a large bite out of inherited wealth.
Federal Estate Tax Rates for 2026
The tax rates for estates that exceed the 2026 exemption remain progressive. The IRS imposes rates beginning at 18 percent for the first $10,000 over the exemption and rising to 40 percent for amounts exceeding $1 million above the threshold.
This means estates worth $16 million or more for individuals, or $31 million or more for married couples, will face the highest tax bracket.
2026 Estate Tax Rate Brackets
Here’s how the rates break down for taxable amounts exceeding the exemption:
- 18% — $0 to $10,000
- 20% — $10,001 to $20,000
- 22% — $20,001 to $40,000
- 24% — $40,001 to $60,000
- 26% — $60,001 to $80,000
- 28% — $80,001 to $100,000
- 30% — $100,001 to $150,000
- 32% — $150,001 to $250,000
- 34% — $250,001 to $500,000
- 37% — $500,001 to $750,000
- 39% — $750,001 to $1 million
- 40% — Over $1 million
These brackets remain indexed for inflation, meaning the exemption and thresholds will adjust annually to reflect changes in the cost of living.
Estate Tax Exemption Growth Over Time
The federal estate tax exemption has seen a steady climb over the past decade. In 2019, it was $11.4 million, and by 2024 it had grown to $13.61 million. With the BBB’s permanent extension, the 2026 exemption of $15 million represents the largest single-year jump in recent history.
| Year | Estate Tax Exemption |
|---|---|
| 2019 | $11,400,000 |
| 2020 | $11,580,000 |
| 2021 | $11,700,000 |
| 2022 | $12,060,000 |
| 2023 | $12,920,000 |
| 2024 | $13,610,000 |
| 2025 | $13,990,000 |
| 2026 | $15,000,000 |
State Estate and Inheritance Taxes Still Apply
While the federal exemption offers broad relief, some states impose their own estate or inheritance taxes with much lower thresholds. For example, Massachusetts has a $2 million estate tax exemption that isn’t adjusted for inflation.
Nebraska and Kentucky also impose inheritance taxes, meaning even relatively modest inheritances may be taxed at the state level.
The Alternative Minimum Tax Returns to Affect More Taxpayers
In addition to changes in estate taxes, the Alternative Minimum Tax (AMT) thresholds will shift in 2026, potentially impacting high-income earners. The AMT ensures that taxpayers who claim many deductions still pay at least a minimum amount of federal tax.
Recent legislation made AMT exemptions permanent but lowered the phase-out threshold starting in 2026.
AMT Thresholds and Phaseouts for 2026
Under the BBB, the AMT exemption remains high, but the phase-out thresholds are shrinking. In 2026, phaseouts begin at $500,000 for single filers and $1 million for married couples filing jointly.
The rate at which the exemption phases out doubles from 25 percent to 50 percent, meaning higher-income taxpayers will lose their AMT relief faster.
How the AMT Thresholds Changed
Before the 2017 Tax Cuts and Jobs Act (TCJA), approximately 5 million Americans paid AMT annually. The TCJA raised the exemption amounts—up to $137,000 for married couples and $88,100 for single filers—and boosted the phase-out thresholds.
This dropped the number of taxpayers paying AMT to about 200,000 by 2018.
Starting in 2026, however, the lowered thresholds will pull more high-income taxpayers back into the AMT system, effectively increasing their tax liability. Even individuals who haven’t paid AMT in recent years could be subject to it again.
What These Changes Mean for Taxpayers
The higher estate exemption is welcome news for heirs and wealthy families, potentially reducing the number of estates subject to federal taxation. However, the AMT changes may offset these savings for some high-income earners who will once again find themselves facing additional tax burdens.
Planning Ahead for 2026
Tax experts recommend that individuals with substantial estates or complex financial situations begin planning now. Strategies such as lifetime gifting, trust creation, and charitable contributions can help minimize future estate tax exposure.
Likewise, high earners should review their income strategies and deductions ahead of the 2026 AMT changes to avoid surprises.
The Bottom Line
The 2026 tax landscape will bring both opportunity and challenge. While heirs of large estates may benefit from the newly expanded exemption, more affluent taxpayers could face higher bills due to AMT phase-outs.
Careful planning and early consultation with a qualified tax advisor remain the best ways to protect wealth and reduce liabilities.
