Good news for most families—the exemption just went up (and isn't going away)
If you've been following estate planning news, you may have heard about a big change that was supposed to happen in 2026. Let me break down what actually happened—and what it means for you and your family.
What Changed?
Congress recently passed the One Big Beautiful Bill Act (OBBBA), which made several important changes to federal estate and gift tax law.
Here's the headline: The estate tax exemption went up, and the scheduled reduction that was supposed to happen this year is now off the table.
First, a Quick Refresher: What Is an Estate Tax Exemption?
Think of the federal estate tax exemption as a "free pass" amount—the value of assets you can pass on to your heirs without Uncle Sam taking a cut.
Everything above that threshold gets taxed at up to 40%. So the higher the exemption, the more your family keeps.
What the New Law Does
Here are the key changes under the One Big Beautiful Bill Act:
The exemption went up:
The federal estate and gift tax exemption is now $15 million per person (up from $13.99 million in 2025).
For married couples, the combined exemption is $30 million.
The scheduled reduction was eliminated:
Under the 2017 Tax Cuts and Jobs Act, the exemption was supposed to drop to approximately $7 million per person on January 1, 2026. That reduction is now permanently off the table.
The exemption will adjust for inflation:
Starting in 2027, the $15 million exemption will be adjusted annually for inflation. This means it will gradually increase over time.
The tax rate stayed the same:
The top federal estate tax rate remains 40% on the value of assets above the exemption.
Good News for Colorado and California Residents
Neither Colorado nor California has a state-level estate tax.
This means if you live in Colorado or California, you only need to worry about federal estate tax—not an additional state estate tax on top of it.
(Some states like Washington, Oregon, and Massachusetts do have their own estate taxes, often with lower exemption amounts. But that's not an issue here.)
What This Means for Your Estate Plan
How these changes affect you depends on the size and structure of your estate:
If your estate is under $15 million (or $30 million for married couples):
You won't owe any federal estate tax. Your assets will pass to your heirs without federal estate tax liability.
If your estate is larger than the exemption:
The 40% federal tax rate applies to the amount above the threshold. There are still planning strategies available to reduce or manage that tax exposure, and we can talk through those options.
If you made plans based on the old sunset provision:
If you structured your estate plan around the idea that the exemption was dropping to $7 million—maybe you did accelerated gifting or created certain trusts—it's worth reviewing your plan in light of the new rules to make sure everything still makes sense.
Estate Planning Is Still Important
Even with these changes, having a current, comprehensive estate plan remains essential.
Estate planning isn't just about taxes. It's about:
- Making sure your assets go to the people you love
- Naming guardians for minor children
- Designating who makes medical and financial decisions if you can't
- Protecting your beneficiaries
- Ensuring your wishes are honored
And tax laws can change again. The plan that reflects current law gives your family the most reliable framework.
2026 Federal Estate Tax: Quick Reference
- Exemption per person: $15,000,000
- Exemption per married couple: $30,000,000
- Top tax rate above exemption: 40%
- Sunset provision: Eliminated
- Inflation adjustment: Annual, starting 2027
- Colorado & California state estate tax: None
Questions About How This Affects You?
If you'd like to review your estate plan in light of the new law—or if you don't have an estate plan yet and want to create one—I'm here to help.
We can look at your situation together, talk through what makes sense for your family, and make sure you have a plan that reflects both your wishes and current law.