The Estate Tax Sunset That Never Happened — and the Planning That Still Matters

What Happened to the Estate Tax Sunset?

The short answer: the One Big Beautiful Bill Act, signed into law on July 4, 2025, eliminated the scheduled sunset entirely. Instead of falling to roughly $7 million per person on January 1, 2026, the federal estate, gift, and generation-skipping transfer tax exemption rose to $15 million per individual — $30 million for a married couple — with no expiration date written into the law.

Under the 2017 Tax Cuts and Jobs Act, the exemption had been temporarily doubled, reaching $13.99 million per person in 2025. That increase was set to expire December 31, 2025. The new law replaced the temporary increase with a permanent one, amending the tax code so that $15 million is now the baseline, indexed for inflation in the years ahead.

The top federal estate tax rate remains 40% on amounts above the exemption. Portability — the ability of a surviving spouse to use a deceased spouse's unused exemption — is unchanged, and still requires filing an estate tax return to claim it.

Does “Permanent” Actually Mean Permanent?

It means there is no automatic expiration date. It does not mean a future Congress can't change the law.

This distinction matters for how you plan. Under the old regime, plans had to work around a known deadline. Under the new one, the deadline is gone — but exemption levels have moved repeatedly over the past 25 years, in both directions. Planning that works at multiple exemption levels is more durable than planning that assumes today's number lasts forever.

The practical shift: urgency-driven planning is over. Deliberate planning is not.

I Made Large Gifts Before 2026 to Beat the Sunset. Was That a Mistake?

No — and you may have gained additional capacity.

Gifts made under the higher exemption in prior years remain fully sheltered. The clawback concern that worried many families — losing the benefit of large gifts if the exemption later dropped — is now moot, since the exemption went up rather than down.

More useful going forward: prior gifts count against your lifetime total, but the increase to $15 million creates fresh room. As a hypothetical example, someone who gifted $13 million in 2024 against that year's $13.61 million exemption now has roughly $2 million of new capacity, plus future inflation adjustments. The core logic of lifetime gifting also survives intact — assets transferred today remove all future appreciation from your taxable estate, which is where the largest long-term numbers live.

If My Estate Is Under $15 Million, Am I Done With Estate Planning?

You're likely done with federal estate tax planning. You are not done with estate planning. Four issues remain live for families well below the federal threshold.

State estate and inheritance taxes. More than a dozen states and the District of Columbia impose their own estate or inheritance taxes, with thresholds far below the federal exemption — Oregon starts at $1 million and Massachusetts at $2 million, while New York's exemption comes with a cliff that can expose the entire estate if you exceed it by too much. Arizona has no state estate tax, but that protection doesn't travel: a vacation home in another state, or an heir who lives in an inheritance-tax state, can create exposure the federal exemption does nothing about.

Basis planning. For most families now clear of federal estate tax, the bigger tax question at death is capital gains, not estate tax. Assets held until death receive a step-up in basis; gifted assets carry over your original basis. Under the old sunset pressure, giving assets away early often made sense even at the cost of the step-up. With a permanent high exemption, that math frequently reverses — holding appreciated assets until death can be the better move. Plans built during the sunset era deserve a second look on exactly this point.

Portability filings. A surviving spouse can only use a deceased spouse's unused exemption if an estate tax return was filed at the first death — even when no tax was owed. Skipping that filing can turn into a seven-figure mistake years later if the survivor's estate grows past a single exemption. For widows and widowers, this is one of the most consequential and most commonly missed steps in the entire transition.

Existing trust structures. Trusts created to beat the sunset — SLATs in particular — aren't wrong now, but their purpose has shifted. Some still earn their keep through creditor protection, state tax planning, or moving future appreciation out of the estate. Others impose complexity and locked-in decisions that no longer buy anything. Worth a deliberate review rather than autopilot.

What Should You Actually Do Now?

Review anything built between 2020 and 2025, because it was likely built for a world that didn't happen. A reasonable checklist:

1. Confirm whether your estate plan assumed a 2026 exemption drop, and whether any of its structures were justified primarily by that assumption.
2. Revisit gifting strategy through a basis lens — what should be given during life versus held for the step-up.
3. Check state-level exposure for any property owned outside Arizona and for heirs living in inheritance-tax states.
4. If you've lost a spouse, verify whether a portability election was filed — and if the death was recent, whether the filing window is still open.
5. Treat “permanent” as “current law,” and keep flexibility in any irrevocable structure where you can.