The IRS recently issued Revenue Procedure 2025-32 announcing the 2026 updates for various tax provisions, including the federal estate and gift tax exemption and the gift tax annual exclusion. The 2026 federal estate and gift tax exemption will increase to $15,000,000, up from $13,990,000 in 2025, under the One Big Beautiful Bill Act (“OBBBA”), as discussed in this blog post by Aubin Fefley. The annual exclusion for gifts will remain $19,000 in 2026, which is unchanged from 2025.
This increase to the federal estate and gift exemption amount to $15,000,000 generally means that estates of individuals who die in 2026 with combined assets and prior taxable gifts in excess of $15,000,000 must file federal estate tax returns, and federal estate tax may be due. With proper estate and tax planning, the federal exemption amount for married couples is essentially double the individual exemption, or $30,000,000 under 2026 law.
Since 2012, the IRS has increased the federal exemption amount each year to adjust for inflation (besides in 2018, when the federal exemption amount doubled under the Tax Cuts and Jobs Act of 2017, and now with the increase under the OBBBA). Below is a list of historical federal transfer tax exemption amounts:
| Past Federal Transfer Tax Exemption Amounts |
|
|---|---|
| Year(s) | Exemption |
| 2004–2005 | $1,500,000 |
| 2006–2008 | $2,000,000 |
| 2009 | $3,500,000 |
| 2010–2011 | $5,000,000 |
| 2012 | $5,120,000 |
| 2013 | $5,250,000 |
| 2014 | $5,340,000 |
| 2015 | $5,430,000 |
| 2016 | $5,450,000 |
| 2017 | $5,490,000 |
| 2018 | $11,180,000 |
| 2019 | $11,400,000 |
| 2020 | $11,580,000 |
| 2021 | $11,700,000 |
| 2022 | $12,060,000 |
| 2023 | $12,920,000 |
| 2024 | $13,610,000 |
| 2025 | $13,990,000 |
| 2026 | $15,000,000 |
The tax rate for assets owned by an individual in excess of the $15,000,000 exemption amount remains at 40%, which is unchanged from 2025.
The 2026 federal annual exclusion amount for gifts remains $19,000, which is the same as the 2025 exclusion. Under this change, in 2026 an individual may gift up to $19,000 to an unlimited number of recipients without federal gift tax consequences, meaning that the gifts are gift tax free, no gift tax return is required, and no reduction of the federal gift tax exemption results. Married couples may gift up to double that amount ($38,000) to each person in 2026 without federal gift tax consequences.
The current $3,000,000 Washington state estate tax exemption is also set to be adjusted for inflation in 2026. However, there is uncertainty surrounding whether the inflation adjustment will actually occur this year. Under Washington statute RCW 83.100.020(1)(a)(ix), starting in 2026 the state estate tax exemption inflation adjustment is calculated using the most recent October consumer price index for the Seattle metropolitan area, as calculated by the United States Bureau of Labor Statistics. But with the federal government shutdown, the Bureau of Labor Statistics has not collected October data, and the White House has said October’s inflation reports may never be released. If the inflation reports are never released, it is unclear how the Department of Revenue will calculate the estate tax inflation adjustment (if at all).
Each person’s specific circumstances will determine whether federal estate and/or gift tax planning is appropriate. If you have any questions about the federal estate and gift tax exemption and how it may impact your estate planning, please contact an attorney in our estate planning practice group, including Ryan Montgomery (rmontgomery@montgomerypurdue.com) or Allison Int-Hout (ainthout@montgomerypurdue.com).