Updated November 2026 · VG CPA PC advisors
The federal exemption
For 2026, each person can transfer $15 million during life or at death without federal estate or gift tax, indexed for inflation after that. A married couple can transfer $30 million. Transfers above the exemption are taxed at up to 40%.
The annual gift exclusion lets you give a set amount per recipient each year without using any exemption, and payments directly to schools or medical providers for someone else are unlimited.
Portability
When the first spouse dies, the unused exemption can pass to the surviving spouse, but only if an estate tax return (Form 706) is filed to elect portability. Many families skip this filing because no tax is due, and lose millions of dollars of exemption.
A simplified late election is available for up to five years after death in many cases.
State taxes and planning
Maryland has both an estate tax and an inheritance tax, New York has an estate tax with a sharp cliff, and the District of Columbia has an estate tax, all with exemptions far below the federal amount. Residents of these places can owe state tax even when no federal tax is due.
Lifetime gifts of appreciating assets, family limited partnerships with valuation discounts, trusts for children and grandchildren, and charitable strategies remain useful, especially for families above the exemption or with state exposure.