2026 FEDERAL ESTATE TAX UPDATE
Federal estate tax law changed in 2025. Under the law enacted as Public Law 119-21, the federal basic exclusion amount increased to $15 million per person for 2026. For married couples, the combined amount may reach approximately $30 million, depending on how assets are owned, prior taxable gifts, and whether portability is properly elected when needed. The amount is scheduled to adjust for inflation after 2026. These changes make it important to understand how your existing estate plan works under current law.
Federal estate tax law has undergone an important change. What was once expected to be a significant reduction in the federal estate tax exemption after 2025 has been addressed by new legislation. While this change provides greater certainty for many families, it does not mean estate planning is no longer important. Your assets, family circumstances, and long-term goals still deserve careful consideration.
How the $15 Million Federal Estate Tax Exemption Affects Florida Families
For years, families and tax professionals anticipated a federal estate tax exemption reduction after 2025. The Tax Cuts and Jobs Act had temporarily increased the exemption, with that increase originally scheduled to expire at the end of 2025.
Congress addressed that scheduled reduction through legislation enacted on July 4, 2025. Under Public Law 119-21, the federal basic exclusion amount increased to $15 million per decedent for 2026. The amount will be adjusted for inflation for calendar years beginning after December 31, 2026.
For married couples, this can potentially provide approximately $30 million in combined federal estate and gift tax exclusion. However, a married couple does not automatically receive a single shared $30 million exemption. Each spouse has an individual exclusion, and how property is owned, lifetime taxable gifts, applicable deductions, and the use of portability can affect how much exclusion is ultimately available.
For Florida residents, there is another important distinction: Florida does not currently impose a separate state estate tax or inheritance tax. However, federal estate tax rules can still apply to Florida residents whose taxable estates exceed the applicable federal exclusion amount.
One planning consideration for married couples is portability. If the first spouse to die does not use all of that spouse's federal estate tax exclusion, the surviving spouse may be able to use the deceased spouse's unused exclusion amount. This is known as the deceased spousal unused exclusion, or DSUE.
Portability is not automatic. The deceased spouse's estate generally must file a properly completed and timely IRS Form 706 to make the portability election, even when the estate is not otherwise large enough to owe federal estate tax. The ordinary filing deadline is nine months after death, with an extension available.
However, certain estates that were not otherwise required to file a federal estate tax return may qualify for simplified late-election relief under IRS Revenue Procedure 2022-32. If the applicable requirements are met, the executor may generally file a complete and properly prepared Form 706 on or before the fifth anniversary of the decedent's date of death to elect portability. This relief is subject to eligibility requirements and is not available to every estate.
This is why it is important for families to understand not only the current exemption amount, but also how their assets are titled and whether the appropriate tax filings and elections are made when needed.
Why Your Florida Estate Plan Needs a Growth Strategy
Even if your family's estate is comfortably below the current federal exclusion amount, wealth can change significantly over time. Your primary residence, retirement investments, business interests, and other assets may increase in value as your family continues to build its financial future.
Consider this illustration: If a family's assets are worth $9 million today and grow at an average annual rate of 7%, that amount would grow to approximately $17.7 million over 10 years, assuming no withdrawals or additional contributions.
This is an illustration of how asset growth can affect long-term planning, not a prediction of future investment performance or a calculation of future estate tax. The federal exclusion amount is also scheduled to adjust for inflation after 2026, and the estate tax calculation depends on more than the value of a family's assets today.
It is also important to remember that the federal estate tax calculation may include certain lifetime taxable gifts and other property interests. The value of an estate for federal tax purposes is not always the same as a family's estimated net worth.
Although the current law provides a higher exclusion amount, future legislation could change federal tax rules again. A well-maintained estate plan should account for your current circumstances while remaining flexible enough to address changes in your family, assets, and applicable law.
Florida Property Planning: Lady Bird Deeds vs. Revocable Living Trusts
Florida homeowners sometimes consider an enhanced life estate deed, commonly known as a Lady Bird Deed, as a way to transfer qualifying real estate to beneficiaries outside probate while retaining certain ownership rights during life. However, a Lady Bird Deed addresses the transfer of the particular property described in the deed. It does not coordinate the transfer of bank accounts, investment accounts, business interests, or other assets, and it is not a comprehensive estate or tax planning strategy. A Revocable Living Trust can provide a framework for managing and distributing multiple types of assets, provided those assets are properly transferred to or coordinated with the trust. Neither approach automatically eliminates federal estate tax or protects a person's revocable trust assets from that person's creditors.
Review Your Estate Plan Under Today's Rules
A change in the federal estate tax exemption does not automatically make an existing estate plan outdated. However, it is a good reason to review how your documents are written and whether they still accomplish what you intended.
For example, some older estate plans contain formula provisions designed around prior federal estate tax exemption amounts. Depending on how those provisions are drafted, changes in the exemption can affect how assets are allocated between a surviving spouse and other beneficiaries.
A review may be particularly worthwhile if:
- Your estate planning documents were prepared under substantially lower federal estate tax exemption amounts.
- You have experienced significant growth in your investments, real estate, or business interests.
- You are married and want to understand how portability may affect your surviving spouse.
- Your family circumstances, beneficiaries, or distribution goals have changed.
- You have a revocable living trust and want to confirm that its funding and distribution provisions still reflect your wishes.
Estate planning is about more than minimizing taxes. It is also about maintaining control over how your assets are managed, providing for the people you love, planning for incapacity, and making the transfer of your property as orderly as possible.
To learn more about the foundational documents that may be part of your plan, explore our Revocable Living Trust page, our Florida Last Will and Testament guide, and our Frequently Asked Questions.
Sources and Legal References
- IRS – What's New: Estate and Gift Tax (2026 federal exclusion amount)
- Public Law 119-21, § 70106 (Increase in federal estate and gift tax exclusion amounts)
- IRC § 2010 (Unified credit against estate tax and portability)
- IRS Instructions for Form 706 (Estate tax filing and portability election requirements)
- IRS Revenue Procedure 2022-32 (Simplified late portability election relief and five-year filing period)
- IRS Form 706 (United States Estate and Generation-Skipping Transfer Tax Return)
- Florida Department of Revenue – Estate Tax (Florida estate tax status)
- Florida Department of Revenue – Other Taxes and Fees (Florida inheritance and gift tax information)
- Fla. Stat. § 736.0505 (Creditor claims against settlor)
Published December 7, 2025 | Last reviewed November 2, 2026
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