While the fear of a tax cliff dominated estate planning discussions for years, the reality of 2026 has arrived with a different outcome than many anticipated. The projected expiration of the Tax Cuts and Jobs Act (TCJA) exemptions, which would have slashed the estate tax threshold by roughly 50%, did not come to pass.
Instead, new federal legislation enacted in late 2025 has not only preserved the higher exemption levels but increased them.
This article outlines the current 2026 estate tax laws, explains why the sunset didn’t happen, and details why strategic planning is still essential even with these higher thresholds.
Table of Contents
New 2026 Numbers: A Historic High
For years, families were warned that the estate tax exemption would revert to roughly $7 million per person on January 1, 2026. That reversion was prevented. Under the new legislation, effective January 1, 2026, the federal estate tax exemption has risen to a new historic high.
Current Federal Estate Tax Exemption (2026)
| Filing Status | 2025 Exemption | 2026 Exemption (Current) |
| Individual | $13.61 Million | $15.0 Million |
| Married Couple | ~$27.2 Million | $30.0 Million |
Key Update: The federal estate tax rate remains at 40% for assets exceeding these thresholds.
The Sunset That Didn’t Happen
The original 2017 law included a sunset provision scheduled to trigger on December 31, 2025. However, Congress passed legislation before the deadline that permanently established these higher baselines and continued their adjustment for inflation. This move has spared thousands of families (those with estates between $7 million and $15 million) from immediate federal tax exposure.
Why You Still Need an Estate Plan
With a $30 million exemption for married couples, many families might feel they can check estate planning off their to-do list. This is a dangerous misconception. While federal tax liability may be lower, the complexity of managing, protecting, and transferring wealth has not changed. In fact, the new rules require a review of old plans to ensure they haven’t become too aggressive.
1. State Estate Taxes Are Unchanged
The federal government may have raised its exemption, but many states have not. States like New York, Massachusetts, Oregon, and Washington still impose their own estate taxes with exemptions often far lower than the federal $15 million.
Example:
If you live in a state with a $6 million exemption and have a $10 million estate, you may owe zero federal tax but still face a six-figure state tax bill.
2. The Danger of Over-Planning
Many estate plans created between 2020 and 2025 were designed to aggressively move assets out of your name to avoid the feared $7 million cap.
3. Asset Protection and Liquidity
Estate planning is not just about taxes; it is about control.
What Proactive Steps Should You Take in 2026?
The preservation of the higher exemption opens a new window for optimization rather than emergency avoidance.
Key Actions to Discuss with an Attorney
Navigating the New Landscape with Stein Sperling
The shift from preparing for the cliff to managing the new normal requires a sophisticated legal eye. The strategies that made sense in 2024 may now be counterproductive.
Stein Sperling Estate Planning Attorneys are actively helping clients pivot their strategies to align with the 2026 reality. Their team focuses on ensuring your plan effectively balances tax efficiency, asset protection, and family harmony, regardless of what Congress does next.
Bottom Line
The Use It or Lose It emergency is over, but the need for a coherent strategy is not. The increase to a $15 million exemption is a major victory for wealth preservation, but it requires you to actively update your documents to ensure you aren’t planning for a crisis that never came.
