The federal estate tax exemption has changed dramatically over the past two decades, and the most recent change is also the most permanent. The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, set the federal estate and gift tax exemption at $15 million per individual, or $30 million for a married couple, starting January 1, 2026. Unlike the exemption increases under the 2017 Tax Cuts and Jobs Act, which were scheduled to expire at the end of 2025, the new exemption amount has no sunset date and will continue to be adjusted for inflation each year going forward.
How We Got Here: A Brief History of the Federal Estate Tax Exemption
The federal estate tax exemption has moved substantially over the past 25 years. In 2001, the exemption stood at $1 million, with amounts above that taxed at 55 percent. The Bush-era tax cuts phased in a series of increases and briefly repealed the estate tax entirely for 2010, before a temporary compromise set the exemption at $5 million with a 35 percent rate for 2011 and 2012.
The 2017 Tax Cuts and Jobs Act (TCJA) roughly doubled the exemption to $11.18 million per individual, later adjusted for inflation to nearly $14 million by 2025. That increase, however, was scheduled to expire after 2025, which would have cut the exemption roughly in half without further legislative action.
What the One Big Beautiful Bill Act Changed
The OBBBA eliminated that looming sunset. Instead of the exemption dropping back down in 2026, it increased to $15 million per individual, or $30 million for married couples using portability, and Congress removed the automatic expiration that had created so much uncertainty under the TCJA. The top federal estate, gift, and generation-skipping transfer tax rate remains 40 percent on amounts above the exemption.
Why Estate Planning Still Matters at Any Exemption Level
A high federal exemption does not eliminate the need for careful estate planning. Pennsylvania imposes its own inheritance tax, which applies regardless of the size of the estate and is calculated based on the relationship between the deceased and the beneficiary. Life insurance proceeds, retirement accounts, and jointly held property can also raise planning questions independent of the federal exemption amount.
Tools such as irrevocable trusts, lifetime gifting, spousal lifetime access trusts, and charitable giving strategies remain relevant for families concerned about future law changes, multi-generational wealth transfer, or minimizing Pennsylvania inheritance tax exposure. Because exemption amounts and tax rates have changed repeatedly over the past two decades, periodically reviewing an existing estate plan with an attorney helps ensure it still reflects current law and your family’s circumstances.
Frequently Asked Questions
What is the federal estate tax exemption for 2026?
Under the One Big Beautiful Bill Act, the federal estate and gift tax exemption is $15 million per individual, or $30 million for a married couple, starting January 1, 2026, with no scheduled expiration.
Does the new exemption expire like the TCJA increase did?
No. Unlike the 2017 Tax Cuts and Jobs Act increase, which was set to expire after 2025, the OBBBA’s $15 million exemption has no sunset date and will be adjusted annually for inflation.
What tax rate applies to amounts above the exemption?
The top federal estate, gift, and generation-skipping transfer tax rate remains 40 percent on amounts above the exemption.
Does Pennsylvania have its own estate or inheritance tax separate from the federal exemption?
Yes. Pennsylvania imposes an inheritance tax that applies regardless of the size of the estate, calculated based on the relationship between the deceased and the beneficiary.
If my estate is well under $15 million, do I still need an estate plan?
Yes. Estate planning still addresses issues like Pennsylvania inheritance tax, life insurance and retirement account beneficiary designations, guardianship, and asset distribution that have nothing to do with the federal exemption amount.
Contact an Experienced Pennsylvania Estate Planning Attorney
Established in 1952 by Irwin S. Rubin, Rubin, Glickman, Steinberg & Gifford P.C. has more than 65 years of experience serving clients throughout Pennsylvania. Our estate planning attorneys can help you understand how the current federal exemption and Pennsylvania inheritance tax rules apply to your estate, and build a plan designed to protect your family’s assets. Call (215) 822-7575 or complete our online contact form to schedule a consultation.
Rubin, Glickman, Steinberg & Gifford P.C.
Pennsylvania Attorney's
August 18, 2026
