For years, estate planning conversations centered on a deadline: the doubled estate tax exemption was set to be cut in half on January 1, 2026. That deadline is gone. The 2025 One Big Beautiful Bill Act replaced it with a permanent, higher exemption, and that changes how advisors should talk about estate liquidity.
Key takeaways
- From January 1, 2026, the federal estate, gift, and generation-skipping exemption is $15 million per person ($30 million for married couples), indexed for inflation after 2026.
- The exemption no longer has a scheduled sunset, though Congress can always change the law again.
- Clients with estates above the exemption, estates likely to grow past it, or exposure to state estate taxes still need a liquidity plan.
$15 million per person, $30 million per couple, indexed for inflation and with no scheduled sunset — starting January 1, 2026.
What changed
Under the 2017 Tax Cuts and Jobs Act, the exemption roughly doubled but was scheduled to fall back by about half at the start of 2026. The One Big Beautiful Bill Act, signed in July 2025, instead set the exemption at $15 million per person from 2026, indexed for inflation in later years, with no sunset date. The top federal estate tax rate remains 40%.
What still applies for married couples
- Two exemptions: a married couple can shelter up to $30 million combined.
- Portability: a surviving spouse can use the deceased spouse’s unused exemption, but only if an estate tax return is filed at the first death, even when no tax is owed.
- Second-death planning: with the unlimited marital deduction, estate tax is usually deferred to the second death, which is why survivorship life insurance is typically the most cost-efficient way to fund it.
Who still needs estate liquidity planning
- Clients whose estates exceed, or are likely to grow past, the exemption.
- Clients in states with their own estate or inheritance tax. Roughly a dozen states plus D.C. levy estate tax, some with exemptions far below the federal level.
- Owners of illiquid assets, such as a business or real estate, who need cash for taxes, equalization among heirs, or buyouts.
- Clients who want protection against future law changes. “Permanent” means no scheduled expiration, not that Congress can’t revisit it.
Where life insurance fits
Life insurance owned by an irrevocable trust can provide tax-free liquidity outside the taxable estate, exactly when it’s needed. For couples, request a survivorship illustration sized to the projected liability; joint life expectancy makes the coverage far less expensive than insuring each spouse separately. If the older generation can’t qualify, see how generational split-dollar can keep the plan alive. For a broader look, read why life insurance is still an estate planning tool.
Frequently asked questions
What is the estate tax exemption in 2026?
$15 million per person, or $30 million for a married couple, under the One Big Beautiful Bill Act. It’s indexed for inflation after 2026.
Did the estate tax exemption sunset in 2026?
No. The 2025 law replaced the scheduled 2026 reduction with a permanent $15 million exemption, with no sunset date.
Do clients under $15 million still need estate planning insurance?
Some do, especially those in states with their own estate taxes, those with illiquid assets, and those whose estates are likely to grow past the exemption.
Reviewed by Tim Fuller on 2026-09-25
Tim Fuller
President, SRS Inc.
Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.
Connect on LinkedIn →We’re Here to Help
Have a question about what you just read, or a case you’re working on? Tell us a bit about what you need, and a member of the SRS team will follow up with you personally — no obligation, no hassle.
