The Permanent $15M Estate Exemption: What Owners Should Know

Last Updated: November 2026

The federal estate and gift tax exemption is now permanent. For 2026, the IRS set the basic exclusion amount at $15,000,000 per person in Revenue Procedure 2025-32. The One Big Beautiful Bill Act made this level permanent and ended the TCJA sunset that would have cut it roughly in half. A person can transfer up to that amount during life or at death with no federal estate or gift tax. With planning, a married couple can shield up to $30,000,000 combined.

The team at Sofer Advisors values closely held companies for owners, CPAs, and the attorneys who handle estate and gift planning.

This guide explains why the exemption is permanent, the tradeoff between gifts and basis, and how valuation discounts help business owners.

Key Takeaways

• The 2026 federal estate and gift tax exemption is $15,000,000 per person, set by the IRS in Revenue Procedure 2025-32.
• The One Big Beautiful Bill Act made the exemption permanent and ended the TCJA sunset that would have cut it in half.
• A married couple can shield up to $30,000,000 combined with proper planning.
• Lifetime gifts carry over your basis, while assets held until death get a step-up, so basis planning now matters more.
• Some states set their own, lower thresholds, so a federal-only plan can miss state tax.

Why is the $15 million exemption now permanent?

The change came from the 2025 federal tax law. People call it the One Big Beautiful Bill Act, or OBBBA. It set the basic exclusion amount at $15,000,000 per person for 2026. The IRS confirmed that figure in Revenue Procedure 2025-32. Just as important, the law made the amount permanent.

Before this, the rule had an end date. The TCJA raised the exemption, but only through 2025. After that, it was set to fall. The drop would have been roughly half. That looming cut drove a wave of deadline planning. Owners gifted assets early just to lock in the higher amount. That pressure is now gone.

Permanence changes how you plan. You no longer race a clock. You can take the time to value the business well. You can weigh a gift against the basis your heirs would lose. The goal moves from beating a sunset to building a sound long-term plan.

One caution helps here. “Permanent” means the current law has no end date. It does not mean the rule can never change. A future Congress can still amend it. So plan for today’s rules, but keep the plan flexible.

How much can you give or leave tax free?

Two numbers drive most planning. The first is the lifetime exemption. The second is the annual gift exclusion. They work together, but they are not the same.

The lifetime exemption is $15,000,000 per person for 2026. It is unified. That means gifts during life and transfers at death draw from one shared pool. Say you give $5,000,000 during your life. You then reduce what is left for your estate by that amount.

The annual gift exclusion is $19,000 per recipient for 2026. You can give that much to as many people as you like each year. These gifts do not touch your lifetime exemption. A married couple can combine their exclusions and give more to each person.

A married couple can shield up to $30,000,000 combined. Each spouse has a separate $15,000,000. With proper planning, the two amounts stack. Above the exemption, the top federal transfer tax rate is 40%. That rate is why planning still matters at higher wealth levels.

What is the tradeoff between gifts and basis?

Timing a transfer is not only about the exemption. Basis matters too. Basis is the cost figure used to measure gain when an asset is sold. A low basis can mean a big tax bill on a later sale.

Lifetime gifts carry over your basis. Your heir takes the asset with the basis you had. Say you built the company from almost nothing. That low basis follows the gift. A later sale can then trigger a large capital gain.

Assets held until death work differently. They generally get a step-up in basis. The basis resets to fair market value at the date of death. An heir who sells soon after may owe little or no capital gains tax.

So there is a real tradeoff. Gifting early can remove future growth from your estate. But it can also give up the step-up. The right answer depends on the asset, its basis, and your family plans. Your estate attorney and tax advisor should run the numbers with you.

How do valuation discounts help business owners?

Gifting a share of a private business is not like gifting cash. A partial interest is worth less than its simple math share. Two discounts often apply. Both can lower the value of what you transfer.

The first is a discount for lack of control. A minority owner cannot set strategy or force a sale. That limit lowers the value of the interest. A buyer would pay less for it.

The second is a discount for lack of marketability. Shares in a private company are hard to sell. There is no public market and no quick exit. That illiquidity lowers value too.

These discounts can stretch the exemption. A lower value means a gift uses less of your $15,000,000. So you can move more of the business at the same exemption cost. The discounts must rest on a defensible valuation. A qualified appraisal spells out the facts and the methods behind each figure. Sofer Advisors prepares reports built to hold up under IRS review.

What is portability and how does it work?

Portability helps married couples. It lets a surviving spouse use the unused exemption of the first spouse to die. The unused amount has a name. It is called the DSUE, which stands for deceased spousal unused exclusion.

The idea is simple. Say the first spouse uses only part of their $15,000,000. The leftover does not vanish. The surviving spouse can add it to their own exemption. This can raise the total the couple passes on tax free.

Portability is not automatic. The estate of the first spouse must make an election. That election happens on a timely filed Form 706. Form 706 is the federal estate tax return. The return is needed even when no tax is due. Miss the filing, and the DSUE can be lost for good.

Do state estate taxes still matter?

Yes, they can. The federal exemption does not cover state tax. Some states run their own estate or inheritance tax. Several set thresholds well below the federal level. A federal-only plan can miss that exposure.

This gap can surprise owners. You might owe no federal estate tax, yet still face a state bill. A business-heavy estate can be short on cash to pay it. The family may then have to sell shares at a bad time. State rules also change often. Check your own state with a local estate attorney before you assume the federal exemption solves everything.

What should owners focus on now?

The urgency has changed, not the need to plan. With no sunset ahead, the work shifts to the long term. A steady, well-documented plan now beats a rushed one.

Start with a current valuation of the business. You cannot plan a transfer without a defensible number. Then review your buy-sell agreements and trust formulas. Many were written for older, lower exemption amounts. Update them so they match today’s rules and your real goals.

Next, weigh basis against the exemption for each asset. A gift that saves estate tax can cost your heirs a bigger capital gain. Think about the cash needed to cover any state tax. Keep family goals in view, not just the tax math. Coordinate every step with your estate attorney and tax advisor. A valuation firm supports that team with clear, supportable numbers.

Frequently Asked Questions

How much is the federal estate tax exemption for 2026?

It is $15,000,000 per person. The IRS set this basic exclusion amount in Revenue Procedure 2025-32. The figure covers both lifetime gifts and transfers at death. A married couple can shield up to $30,000,000 combined with proper planning.

Is the $15 million exemption really permanent?

Yes, under current law. The One Big Beautiful Bill Act made the amount permanent. It ended the TCJA sunset that would have cut the exemption roughly in half after 2025. A future Congress could still change the law, so keep your plan flexible.

What is the annual gift tax exclusion for 2026?

It is $19,000 per recipient. You can give that much to any number of people each year. These gifts do not reduce your $15,000,000 lifetime exemption. A married couple can combine their annual exclusions.

Does a lifetime gift use the same exemption as my estate?

Yes. The gift and estate tax exemption is unified. Lifetime gifts and transfers at death draw from the same $15,000,000 pool. A large gift during life lowers what remains for your estate.

What is portability of the exemption?

Portability lets a surviving spouse use the unused exemption of the first spouse to die. This leftover is called the DSUE. The estate must elect it on a timely filed Form 706, even if no tax is due.

Should I gift business shares now or hold them until death?

It depends on basis. Gifts carry over your basis, which can mean a larger capital gain later. Assets held until death generally get a step-up to fair market value. Your tax advisor should compare both paths for your situation.

How do valuation discounts affect a gift of business interests?

A minority, hard-to-sell interest is worth less than its share of the whole. Discounts for lack of control and lack of marketability lower that value. A lower value uses less of your exemption, so you can transfer more.

What tax rate applies above the exemption?

The top federal transfer tax rate is 40%. It applies to amounts above your available exemption. This is why valuation and careful planning still matter at higher wealth levels.

Do I still owe state estate tax?

Maybe. Some states set their own thresholds below the federal level. You could owe state tax even with no federal tax due. Check your state rules with a local estate attorney.

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Executive Summary

The 2026 federal estate and gift tax exemption is $15,000,000 per person, set by the IRS in Revenue Procedure 2025-32. The One Big Beautiful Bill Act made the exemption permanent and ended the TCJA sunset that would have cut it in half. A married couple can shield up to $30,000,000 combined with proper planning. Lifetime gifts carry over your basis, while assets held until death get a step-up, so basis planning now matters more. Some states set their own, lower thresholds, so a federal-only plan can miss state tax.

What Should You Do Next?

Start with a current, defensible valuation of your business. Then review your trusts and buy-sell agreements against the permanent $15,000,000 exemption. Coordinate every step with your estate attorney and tax advisor. Sofer Advisors provides independent valuation reports for estate and gift planning, led by David Hern CPA ABV ASA CVA. Schedule a free consultation to discuss your situation.

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About the Author

This guide was prepared by David Hern CPA ABV ASA CVA, founder of Sofer Advisors, a business valuation firm headquartered in Atlanta, GA serving clients across the United States. David holds accreditations as an Accredited Senior Appraiser (ASA) and is Accredited in Business Valuation (ABV), credentials recognized by the IRS, SEC, and FINRA, and is also a Certified Valuation Analyst (CVA). David has served as an expert witness in dozens of cases across multiple jurisdictions, and Sofer Advisors is an Inc. 5000 honoree in 2024 and 2025 with 240+ five-star Google reviews.

For professional business valuation services, visit soferadvisors.com/about-us/ or contact Sofer Advisors at soferadvisors.com/contact-us/.

Disclaimer: This content is for informational purposes only and does not constitute professional valuation advice. Business valuation conclusions depend on specific facts and circumstances. Contact Sofer Advisors for guidance regarding your specific situation.