The $15 Million Estate Exemption Is Here to Stay: Rethinking Transfer-Tax Planning After OBBBA

What the law settled

The Tax Cuts and Jobs Act roughly doubled the unified estate, gift, and generation-skipping transfer (GST) tax basic exclusion amount, but only temporarily. Under prior law, that elevated exemption was scheduled to sunset after December 31, 2025, reverting to roughly half — an estimated $7 million or so per individual after inflation adjustment. The 2025 basic exclusion amount was $13,990,000, set in late 2024.

That sunset is gone. The One Big Beautiful Bill Act (OBBBA), Public Law 119-21, signed July 4, 2025, amended IRC § 2010(c)(3) to set the basic exclusion amount permanently at $15,000,000 per individual, indexed for inflation, effective for decedents dying and gifts made after December 31, 2025. The GST exemption is likewise set at $15,000,000. There is no scheduled expiration. The top federal estate, gift, and GST tax rate remains 40 percent.

In October, the IRS confirmed the mechanics. Rev. Proc. 2025-32, released October 9, 2025, set out the inflation-adjusted figures for 2026 and confirmed the basic exclusion amount of $15,000,000 for 2026, up from $13,990,000 in 2025. One figure deserves a specific correction because it is widely assumed to have moved and did not: the annual gift exclusion for 2026 is $19,000 — unchanged from 2025. It did not rise to $20,000.

The end of the cliff changes the question

The removal of the sunset is not a minor adjustment to the numbers; it changes the nature of the planning. For half a decade, transfer-tax planning for high-net-worth families carried a built-in urgency. The elevated exemption was a depreciating asset — available now, scheduled to shrink — and a substantial body of planning was constructed to use it before it disappeared. Large lifetime gifts, trust funding accelerated to beat the deadline, irrevocable structures completed under time pressure: all of it was driven, at least in part, by the cliff.

With the cliff removed, that urgency is gone, and the planning posture should change with it. The "use it or lose it" frame no longer fits. A family is no longer choosing between making a large gift now and losing the exemption later. It is choosing how and when to use a permanently higher exemption, on its own timeline, weighing the genuine trade-offs of lifetime transfers rather than racing a clock.

This is a more comfortable position, but it requires re-examining decisions made under the old pressure. A large gift completed primarily to capture exemption before the 2026 sunset was, by definition, a deadline-driven move. Now that the exemption is permanent, the same family might make a different choice about timing, amount, or structure — not because the prior decision was wrong under the assumptions then in force, but because those assumptions no longer hold.

What deliberate planning looks like now

The defensible approach at a permanently higher exemption is to plan for the trade-offs that the deadline used to overshadow.

The most consequential of those trade-offs is the income-tax basis question. Assets transferred by lifetime gift carry over the donor's basis; assets held until death generally receive a basis step-up. When the estate exemption was about to be halved, the transfer-tax savings from gifting often dominated the analysis. With a permanent $15 million exemption, more families will find that their estates fall comfortably within the exemption, which shifts the balance: for those families, holding appreciated assets to capture the basis step-up may now outweigh the transfer-tax benefit of gifting them away. The right answer depends on projected estate size relative to the exemption, the appreciation profile of the assets, and the family's liquidity and control needs — exactly the kind of multi-factor analysis the deadline used to short-circuit.

For families whose wealth still exceeds the exemption, the planning tools have not changed, but the cadence has. There is time to fund trusts deliberately, to value interests carefully, and to coordinate gifting with the family's broader governance — rather than completing transactions in a year-end scramble. For married couples, portability of the deceased spousal unused exclusion means a couple can shield roughly $30 million from estate and gift tax. One caution worth stating: portability applies to the estate and gift exclusion but not to the GST exemption, which is not portable. Each spouse's $15 million GST exemption must be used or allocated; it cannot be inherited by the survivor — a point that affects how multi-generational planning is sequenced.

Key takeaways

• OBBBA (Pub. L. 119-21) permanently set the basic exclusion amount at $15,000,000 per individual (and the GST exemption at $15,000,000), indexed for inflation, effective for decedents dying and gifts made after December 31, 2025, with the 40 percent top rate unchanged.
• Rev. Proc. 2025-32 (Oct. 9, 2025) confirmed the $15,000,000 exemption for 2026; the 2026 annual gift exclusion is $19,000 — unchanged from 2025, not $20,000.
• The scheduled 2026 sunset to roughly $7 million is gone, replacing "use it or lose it" urgency with deliberate, long-horizon planning.
• A permanent higher exemption elevates the income-tax basis trade-off: for estates now within the exemption, holding appreciated assets for the basis step-up may outweigh lifetime gifting.

Frequently asked questions

Is the estate exemption still going to be cut in half after 2025?

No. OBBBA removed that scheduled sunset and permanently set the basic exclusion amount at $15,000,000 per individual, indexed for inflation, beginning in 2026. There is no scheduled reversion.

Did the annual gift exclusion go up for 2026?

No. Per Rev. Proc. 2025-32, the annual gift exclusion for 2026 is $19,000, the same as 2025. The basic exclusion amount rose to $15,000,000, but the annual exclusion did not change.

Should I still make large lifetime gifts?

It depends on your circumstances more than it used to. With the exemption permanent, the deadline pressure is gone, and the income-tax basis step-up available at death becomes a larger consideration — particularly if your estate now falls within the $15 million exemption. The analysis should weigh transfer-tax savings against the lost basis step-up.

Bottom line

The permanent $15 million exemption converts transfer-tax planning from a race against a sunset into a deliberate, long-horizon exercise. Families should revisit deadline-driven gifts made under the old rules and re-weigh the income-tax basis trade-off that the cliff used to overshadow — planning now for the structure that fits, not the deadline that has been removed.