New Law Raises Estate Tax Exemption to $15M in 2026
Get the Facts on the New Estate Tax Changes & What It Could Mean for You in 2026
A new law is set to dramatically shake up how—and how much—wealth is taxed when it’s passed down. Known as “The One, Big, Beautiful Bill” (OBBB), the law will permanently increase federal estate tax exemptions in 2026, raising them to an unprecedented level within six months.
Igniting both strong support and sharp backlash, the OBBB has become a flashpoint in broader debates over taxation and the future of intergenerational estate planning.
Here’s why, diving into:
This guide walks you through the essentials in under ~4 minutes.
To explore more estate planning news and insights, check out Are You Ready for the Great Wealth Transfer?, Questions Financial Professionals Should Ask (but Don’t), and A Guide to Blended Family Estate Planning.
OBBB: How Estate Tax Exemptions Will Increase in 2026
Introduced by Jodey Arrington (R-TX) on May 20, 2025, The One, Big Beautiful Bill will increase the federal estate tax exemption on January 1, 2026, to:
- $15 million per individual
- $30 million per married couple.
These increased estate tax exemptions come with annual adjustments for inflation and no sunset date, effectively making them “permanent.”
Generally, any changes to estate tax laws can be headline-grabbing. In this case, the exemptions established by the OBBB are particularly notable because:
- Pre-OBBB tax exemptions, established by the 2017 Tax Cuts and Jobs Act (TCJA), were on track to revert to pre-2018 levels without the OBBB.
- The new estate tax law came in at the 11th hour to permanently “lock in” higher estate tax exemptions before they were set to drop to ~$7 million per person (and ~$14 million per couple).
On May 22, 2025, the U.S. House of Representatives passed the OBBB as part of a broader tax package. On July 4, 2025, the OBBB was signed into law (No: 119-21).
5 Possible Impacts of Raising Estate Tax Exemptions in 2026
With the OBBB law, higher estate tax exemptions could have far-reaching effects on families, estate planning, and possibly even policy. Here’s what that could look like next year and after.
1. Fewer estates will be taxed.
Under previous law, only about 0.1% of estates paid federal estate tax. In fact, the latest reports show that only 2,100 deaths (roughly 0.08%) in 2019 triggered an estate tax bill. With higher exemptions, that number will likely get even smaller.
That could effectively eliminate estate taxes for all but the ultra-wealthy.
2. There may be less urgency for pre-2026 gifting.
Prior to the OBBB, many individuals and families expected exemptions to drop next year. With that, making lifetime gifts before the TCJA provisions were set to expire became a key strategic focus.
With the OBBB now establishing higher exemptions, however, the urgency for gifting could dissipate, opening up greater flexibility for longer-term strategies that may better align with short-term tax avoidance.
3. Estate planning could be simplified for many.
Higher exemptions raise the threshold for tax-free wealth transfers, meaning more estates may avoid federal estate taxes altogether or require less intricate planning to minimize potential liabilities.
For some, that could reduce the need for complex tools or complicated estate planning structures, making more foundational devices—like pay upon death designations (PODs) and simpler trusts—sufficient and highly effective.
4. High-net-worth individuals may enjoy BIG tax savings.
For couples with estates just over $30 million, the elevated exemption will significantly reduce the portion subject to federal estate taxes.
Example: A couple’s estate is worth $30,250,000. If pre-2018 exemptions were applied, millions of dollars could be subject to an eye-watering 40% federal estate tax. With the OBBB estate tax exemptions, only $250,000 may be subject to a 32% estate tax rate.
Ultimately, this could translate into millions in potential tax savings for HWN individuals and families.
5. Federal tax revenue will likely drop by billions.
With higher exemptions reducing the number of estates subject to estate taxes, federal tax revenues are expected to drop by at least $200 billion by 2034.
That’s according to the Congressional Budget Office (CBO), which also points out that this could represent one of the biggest drains to federal tax revenues in the coming years.
Supporters vs. Critics: Who’s For & Against Raising Estate Tax Exemptions in 2026?
The OBBB has found ardent supporters in:
- Republican lawmakers who are championing the law as a valuable way to protect family businesses and preserve generational wealth upon death.
- Some wealth advisors and lawyers who favor the clarity and flexibility that could come with a stable, permanently high exemption.
- Small business and agriculture lobbying groups who argue that the law could better safeguard family businesses and facilitate succession.
Countering that, opponents argue that raising estate tax exemptions could:
- Amplify wealth disparities
- Minimize the efficacy of estate tax exemptions
- Result in extreme revenue losses for the federal government.
Critics generally include Democrats, progressive policy groups, some tax policy experts, and federal budget hawks concerned about increasing the national debt.
What Does It All Mean for Me?
If you live in Texas, the 2026 estate tax changes could mean that now’s the right time to:
- Review and possibly rethink your estate plan: With thresholds rising very soon, existing estate plans may not leverage higher exemptions to their full potential. Taking a fresh look at wills, trusts, and estate plans in light of changing estate tax laws can be a prudent move, especially for HNW individuals.
- Plan for volatility: “Permanent” exemptions could still change in the future, especially with political power shifts in the federal government. With that, estate plans with built-in flexibility can better serve your needs as laws evolve, personal circumstances shift, and new tax opportunities (or risks) emerge.
- Recognize the non‑tax benefits of estate planning: Beyond taxes, thoughtful estate plans can establish reliable structures for asset protection, business succession, healthcare directives, probate avoidance, and more. These benefits exist regardless of exemption levels.
- Stay connected with in‑the‑know professionals: The experienced estate planning attorneys at TAW Law Texas closely monitor changes to estate tax laws, so we can help our clients adjust their plans proactively.
What’s Next?
Raising estate tax exemptions to $15 million per person could serve as one of the most significant developments in estate planning over the past decade.
With this new law and higher exemptions on the horizon, individuals, families, and businesses have a unique opportunity to reassess their strategies, take advantage of potential tax savings, and realign their plans with the new legal landscape.
Better Support for Estate Planning & Probate in Austin
With taxes and other aspects of estate planning, the right guidance can provide greater peace of mind that your assets are protected and your estate plan remains effective and fully aligned with your intentions and goals.
At TAW Law Texas, our Austin attorneys counsel individuals, families, businesses, and others in Texas estate planning and probate. Deeply knowledgeable and vigilant of the latest changes in estate tax law, we help clients navigate shifting regulations with confidence, keeping their estate plans strategic, compliant, and in step with their long-term goals.
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Todd A. Wilson
Todd A. Wilson has been practicing law since 2007, with the aim of educating all strata of society and sharing crucial insights about the importance of estate planning, probate, and more.
The Law Office of Todd A. Wilson (also known as TAW Law TX) offers affordable estate planning and probate services.