New for 2026: The Federal Estate Tax Exemption Is Now $15 Million

Original article: 2026 Estate Tax Changes: Strategies and Implications (Creative Planning)

One of the biggest money-and-family changes of 2026 took effect on New Year’s Day. Under the One Big Beautiful Bill Act, passed in 2025, the federal estate and gift tax exemption is now $15 million per person, or $30 million for a married couple, starting January 1, 2026.

What Changed

• The exemption went up instead of down. Under the old law, the exemption was scheduled to drop to roughly $7 million on January 1, 2026. Instead it rose from $13.99 million in 2025 to $15 million.
• No expiration date. The new amount doesn’t have a built-in sunset and will be adjusted for inflation starting in 2027.
• The tax rate above the exemption is still 40%.

What It Means for Most Families

For the vast majority of families, federal estate tax isn’t a concern, and California doesn’t have its own estate tax. That’s a good reminder of what life insurance is really for. For most people, life insurance isn’t a tax strategy. It’s a way to replace income, pay off the mortgage and keep a family’s plans on track after a death.

Life insurance death benefits are generally paid to beneficiaries free of federal income tax, whether the estate is $500,000 or $50 million.

When It Still Matters

Some Bay Area households, especially those with a lot of home equity, company stock or a family business, can still come close to the limit. A life insurance policy owned by the insured person generally counts toward the taxable estate. Larger estates sometimes use an irrevocable life insurance trust (ILIT) to keep the payout outside the estate. That’s a conversation for an estate planning attorney or tax professional, and we can coordinate with them on the insurance side.

A Good Time for a Quick Review

1. Check beneficiaries. Make sure the names on life insurance and retirement accounts match current wishes.
2. Revisit older estate plans. Plans written in 2023 or 2024 may have assumed a much lower exemption.
3. Confirm coverage still fits. A new home, a new baby or a raise can change how much coverage is needed. The guide How Much Life Insurance Is Really Needed? can help.

Read the original articles: Creative Planning: 2026 Estate Tax Changes · Wipfli: What the 2026 estate tax exemption increase means for estate plans
We are a licensed life insurance agency, not a tax advisor or law firm. This post is for general education and isn’t tax, legal or personalized financial advice. Consult a qualified professional about individual situations.