How the New $15 Million Estate Tax Exemption Changes What You Should Do in 2026
Key Points
Two big tax changes over the past decade exempted most Americans from estate taxes.
However, high-net-worth individuals should still be familiar with these new rules.
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Back in 2017, the Tax Cuts and Jobs Act increased the estate tax exemption from $5.5 million to $11.8 million per person. Since that figure was pegged to inflation, the exemption steadily rose to $13.99 million in 2025. That exemption made it much easier for wealthy individuals to pass their entire estate to their heirs upon death without incurring a tax.
That exemption was originally set to expire this year and decline to about $7 million. However, the One Big Beautiful Bill Act set a new baseline exemption of $15 million for 2026 and beyond. It will also be adjusted for inflation every year, but it's a permanent change that won't expire.
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How will this change affect most Americans?
According to the Federal Reserve, Americans aged 75 and older had a median net worth of $335,600 and an average net worth of $1,624,100 at the end of 2022. Therefore, most elderly Americans were already exempt from the estate tax.
Only about 1% of American households have a net worth of over $15 million. Even if those individuals die with more than $15 million in assets, their estates won't be immediately taxed at the maximum 40% rate. Instead, it starts at 18% and goes up to 40% -- with an added "base tax" -- based on the amount by which the $15 million threshold was exceeded.
|
Taxable Amount |
Base Tax |
Estate Tax |
|---|---|---|
|
$1 – $10,000 |
$0 |
18% |
|
$10,001-$20,000 |
$1,800 |
20% |
|
$20,001-$40,000 |
$3,800 |
22% |
|
$40,001-$60,000 |
$8,200 |
24% |
|
$60,001-$80,000 |
$13,000 |
26% |
|
$80,001-$100,000 |
$18,200 |
28% |
|
$100,001-$150,000 |
$23,800 |
30% |
|
$150,001-$250,000 |
$38,800 |
32% |
|
$250,001-$500,000 |
$70,800 |
34% |
|
$500,001-$750,000 |
$155,800 |
37% |
|
$750,001-$1,000,000 |
$248,300 |
39% |
|
$1,000,001+ |
$345,800 |
40% |
Source: SmartAsset.
For example, if a person dies with $17 million in assets, their beneficiaries would need to pay a $345,800 base tax plus $800,000 (40% of the $2 million above the $15 million threshold). Yet that $1.15 million would still be equivalent to less than 7% of the total estate.
What should you do with your assets in 2026?
If you don't own more than $15 million in assets, you don't need to fret over estate taxes at all. But if you exceed that threshold and are preparing to pass on your assets, then it might be smart to spread them out as gifts to reduce that tax burden while you're still here.
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