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 expir...
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. 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% 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 mi...