Estate Tax Exemption Rises to $15 Million Per Person Under New Tax Law
The estate tax exemption increased to $15 million per person in 2026 under the One Big Beautiful Bill Act passed in July 2025, meaning most American families will not face federal estate taxes. Financial planners say the change simplifies estate planning for many households but annual review of estate documents remains important. The law also introduced a new tax-deferred savings account for minors with a $1,000 government contribution for newborns.
The federal estate tax exemption rose to $15 million per person in 2026 under the One Big Beautiful Bill Act signed into law in July 2025, a change that removes most American families from the reach of the federal estate tax.
Under the new threshold, a married couple can pass up to $30 million to their heirs without triggering federal estate taxes. Previously, the exemption was set to drop sharply at the end of 2025 when temporary provisions from the 2017 tax law were scheduled to expire. The new legislation made the higher exemption permanent and indexed it to inflation.
Financial planners said the change simplifies estate planning for the vast majority of households, who no longer need to worry about complex strategies to minimize estate tax exposure. However, advisors cautioned that annual review of estate documents, including wills, trusts, and beneficiary designations, remains important regardless of the tax environment.
"The estate tax exemption is just one piece of a good estate plan," said one certified financial planner. "People still need to think about who gets what, who makes decisions if they are incapacitated, and how to pass assets efficiently to the next generation."
The same legislation introduced a new tax-deferred savings account for minors. Parents can contribute to the account until the child turns 18, and the federal government will deposit $1,000 into the account for every newborn. The accounts are designed to help families build long-term savings for education, housing, or other major expenses.
Other changes under the law include new limits on the tax benefit of charitable deductions for high-income taxpayers and a requirement that higher-income workers aged 50 and older make catch-up retirement contributions to Roth-style accounts, eliminating the immediate tax deduction for those contributions.
Retirement contribution limits also increased, with 401(k) limits rising to $24,500 for most workers and $32,500 for those aged 50 and older.
