The beginning of a new year means new estate and gift tax figures from the IRS! While there has been much uncertainty over the last few years regarding the estate and gift tax exemptions post-2025, the One Big Beautiful Bill Act passed in 2025 has given some certainty to the federal estate tax system, at least for the near term.

Federal Estate and Gift Tax Exemption

The federal estate and gift tax exemption is the amount that an individual can transfer during life or at death without owing federal transfer tax. It is a unified system, meaning that there is one exemption that covers both lifetime gifts (exceeding the annual gift tax exclusion amount, which is described further below) and transfers at death.

The estate and gift tax exemption for 2026 is $15 million per individual. With proper estate planning, married couples can shelter approximately $30 million from federal transfer taxes.

The estate tax rate for 2026 remains at 40% for assets exceeding an individual’s estate and gift tax exemption.

The One Big Beautiful Bill Act passed in 2025 made the $15 million estate and gift tax exemption “permanent” (meaning that the exemption amount will no longer be decreased unless there is new tax legislation signed into law). The $15 million exemption will continue to be indexed for inflation by the IRS.

GST Tax Exemption

The generation-skipping transfer (GST) tax exemption is the amount that an individual can shelter from the GST tax when transferring assets to beneficiaries who are more than one generation younger than an individual (typically, transfers to grandchildren or trusts for grandchildren and more remote descendants).

The GST exemption remains the same as the estate and gift tax exemption, at $15 million per individual for 2026.

Minnesota Estate Tax Exemption

The state of Minnesota also has a state estate tax. The exemption for Minnesota’s state estate tax remains at $3 million for 2026.  Estates of Minnesota residents (or non-residents who own Minnesota sitused property) that exceed the $3 million exemption are subject to state estate tax at a rate of 13-16%.

Unlike the federal estate tax system, Minnesota still does not allow “portability” of a deceased spouse’s estate tax exemption to the surviving spouse. It is critical that married couples with assets exceeding $3 million build estate tax planning provisions into their estate plans to ensure the first spouse to die’s exemption is not wasted.

Annual Gift Tax Exclusion

The IRS sets an annual gift tax exclusion each year, which is the amount an individual may gift per recipient without using any of the individual’s lifetime gift and estate tax exemption. The 2026 annual gift tax exclusion amount is $19,000 per person (remaining the same from 2025). For a married couple, that amount is doubled to $38,000 that the couple may give per recipient in 2026, though unless you are electing gift-splitting on a gift tax return, you should still separately make your own $19,000 gift to a recipient.

Gifts to Non-US Citizen Spouse

When both spouses are US citizens, typically each spouse may transfer unlimited amounts to one another without incurring gift tax. However, gifts to a non-US citizen spouse are limited. For 2026, the amount that can be gifted to a non-US citizen per year is $194,000. Gifts in excess of that amount must be reported on a gift tax return and use some of the available $15 million exemption.

Review Your Estate Plan in Light of Tax Law Changes

We recommend regularly connecting with your estate planning attorney to make sure your estate plan is appropriate for your financial situation. As tax laws change and your balance sheet grows, it is important to ensure that your plan incorporates the proper tax planning for you.

Our estate planning team can assist with wealth transfer planning strategies to reduce your estate and gift tax exposure during your lifetime and ensure that your estate planning documents maximize the use of your exemptions on your death. Contact a member of our estate planning team for assistance.

December 29, 2025