The Estate Exemption Cliff Is Gone: Planning at a Permanent $15 Million

Key takeaways

• The federal estate and gift basic exclusion amount is $15,000,000 per person for decedents dying in 2026 (Rev. Proc. 2025-32), up from $13.99 million in 2025.
• OBBBA made the higher exemption permanent and removed the scheduled end-of-2025 sunset that would have cut it roughly in half.
• The amount is inflation-indexed for years after 2026; the annual gift tax exclusion is $19,000 for 2026.
• The deadline pressure is gone, but lifetime gifting still locks in today's exemption against future legislative change and shifts future appreciation out of the estate.

What the sunset would have done — and why it no longer applies

The 2017 tax law roughly doubled the estate and gift exemption but set it to sunset at the end of 2025. Absent action, the exclusion was scheduled to fall to roughly half its elevated level on January 1, 2026. That prospect drove two years of compressed planning: families with transfer-tax exposure faced a hard decision to use the elevated exemption before it vanished, and the calendar — not the strategy — was often the dominant variable.

OBBBA settled it. The basic exclusion amount is $15,000,000 per person for decedents dying in 2026, per Rev. Proc. 2025-32, and the higher exemption is now permanent rather than scheduled to expire. The amount is indexed for inflation in years after 2026. The annual gift tax exclusion is $19,000 for 2026. The cliff that organized estate planning through 2024 and 2025 is gone.

For families that completed large gifts in 2024 or 2025 specifically to beat the sunset, the immediate question is whether those transactions still fit the plan now that the pressure that motivated them has lifted. In most cases they do — moving appreciating assets out of the estate remains sound — but the *reason* has changed, and the plan should be re-read against the new permanence rather than the old deadline.

Why "permanent" should be read carefully

Permanent, in tax legislation, means "until Congress changes it." It is a meaningful improvement over a scheduled sunset, because the default is now continuation rather than reversion. But it is not a guarantee. Exemption levels are a perennial subject of legislative attention, and a future Congress can lower the exclusion as readily as this one raised it.

That distinction matters for how families should treat the $15 million figure. The deadline-driven urgency is genuinely gone — there is no longer a date on the calendar forcing a decision. What remains is a strategic case for using exemption that does not depend on any deadline at all.

The case for using exemption without a deadline

Two arguments survive the removal of the sunset, and they are the arguments that should now drive the conversation.

Locking in today's exemption against future change

Lifetime gifts use exemption at today's level. If a family makes substantial gifts now and a future Congress later reduces the exclusion, the IRS has confirmed that completed gifts are not clawed back — the higher exemption used is not recaptured. Using exemption while it is high is a way to secure today's number against tomorrow's legislation. That logic held under the sunset and holds equally under permanence, because the risk it addresses is legislative change, not a fixed expiration date.

Removing future appreciation from the estate

The more durable argument has nothing to do with the exemption amount at all. Assets transferred to the next generation or to an irrevocable trust today remove not just their current value from the taxable estate but all of their future appreciation. For a closely held business, a real estate position, or any asset expected to grow, the transfer-tax benefit compounds over time. A $15 million transfer of an asset that doubles removes $30 million of eventual estate value. That benefit is independent of where the exemption sits.

What changes in the conversation

The practical shift is from urgency to deliberation. Planning no longer has to be completed against a December 2025 deadline, which means it can be done well rather than fast — valuations supported properly, trust structures funded with the right assets, family governance addressed rather than rushed. Families that felt pressured into hurried transactions can now plan on a horizon that fits the assets and the relationships, not the legislative calendar.

It also means the conversation should be honest about what is permanent and what is not. The exemption is permanent in the sense that it will not expire on a set date. It is not permanent in the sense of being beyond legislative reach. Families with significant exposure should use the absence of a deadline to plan carefully, not to assume the question has been settled forever.

Bottom line

The exemption cliff that drove estate planning through 2025 is gone: the exclusion is $15 million per person for 2026, indexed and permanent. That removes the deadline, not the strategy. Locking in today's exemption against future legislative change and shifting future appreciation out of the estate remain sound reasons to use exemption — now on a deliberate timeline rather than a forced one.