Deciphering Estate Tax Exemptions

Updated: October 7th 2026

Takeaways

• The federal estate and gift tax exemption is $15 million per person in 2026 ($30 million for a married couple using portability), and the scheduled drop to roughly $7 million no longer applies.
• Twelve states plus Washington, D.C. levy their own estate tax, and Oregon’s $1 million exemption is the lowest in the country.
• Washington’s estate tax exemption is a flat $3 million for deaths on or after July 1, 2026, with rates from 10% to 20%.
• Neither Oregon nor Washington lets a surviving spouse use the first spouse’s unused state exemption, so how a plan handles the first death can change the state tax bill.
• Exemption planning holds up best when your tax strategy and your family’s goals get worked through in the same conversation, which is how the Personal CFO model is built.

For most of the last decade, estate planning came with a deadline attached. The Tax Cuts and Jobs Act exemption was set to be cut roughly in half on January 1, 2026, and many families hurried gifts and trusts to get ahead of it.

That deadline is gone. The One Big Beautiful Bill Act, signed July 4, 2025, set the federal estate tax exemption at $15 million per person starting in 2026, with no scheduled expiration. For the vast majority of families, federal estate tax is now a distant concern.

State estate tax is a different story. If you live in Oregon or Washington, or own property there, the number that matters may be $1 million or $3 million.

Below, we walk through how the federal exemption works today, where state rules part ways with it, and the questions worth asking before you use either one.

The 2026 estate tax exemption cliff that didn’t happen

The 2017 Tax Cuts and Jobs Act roughly doubled the federal estate and gift tax exemption, with an expiration date at the end of 2025. Had that sunset taken effect, the exemption would have fallen to about $7 million per person. When this article first ran in 2024, that cliff drove a lot of planning. Families with estates above $7 million weighed large lifetime gifts to lock in the higher amount before it disappeared.

The One Big Beautiful Bill Act changed the math. Starting January 1, 2026, the exemption is $15 million per individual and $30 million for a married couple, adjusted for inflation each year. “Permanent” here means there’s no built-in sunset. Congress can still change the law, so the number is worth watching, but it no longer has a countdown clock.

Gifts already made under the old rules stay made. What changed is the urgency. A strategy designed to beat a 2026 deadline may deserve a fresh look now that the deadline is off the table.

How the Federal Estate Tax exemption works in 2026

The federal estate tax applies to the value of what you own at death above your exemption, at a top rate of 40%. The same exemption also covers gifts you make during your life, which is why it’s often called the unified lifetime exemption. Each dollar of taxable gifts reduces what’s left to shelter your estate at death.

2026 Federal Estate and gift tax numbers

• Lifetime estate and gift tax exemption: $15 million per person
• Married couple with portability: $30 million combined
• Annual gift tax exclusion: $19,000 per recipient ($38,000 for a married couple)
• Generation-skipping transfer (GST) tax exemption: $15 million per person
• Top federal estate tax rate: 40%

Portability lets a surviving spouse use whatever federal exemption the first spouse didn’t. It isn’t automatic. The executor has to elect it on a timely filed federal estate tax return (Form 706), even when no tax is due. That filing is easy to skip when the first estate is well under $15 million, and skipping it can leave the surviving spouse with millions less in exemption later.

Annual exclusion gifts work separately and don’t touch your lifetime exemption. Hypothetical example: a married couple with three children and six grandchildren could give $38,000 to each of those nine people, moving $342,000 a year out of their estate without using any lifetime exemption. The example is for illustration only; the right gifting level depends on what the couple needs to keep for themselves.

Thinking through how the 2026 exemption changes your estate plan? Let’s talk about your complete financial picture. Schedule a complimentary intro call.

State estate tax: Where West Coast families feel it

The federal increase did nothing to state estate taxes. Twelve states and Washington, D.C. levy their own estate tax, and five states separately charge an inheritance tax, which falls on the person receiving the assets rather than on the estate. Most state exemptions sit far below $15 million.

Across the West Coast, the rules look very different from one border to the next:

Two details make state planning harder than federal planning. First, there’s no portability in Oregon or Washington. If the first spouse leaves everything outright to the survivor, the first spouse’s state exemption simply goes unused. Second, the exemptions are low enough that ordinary assets cross them. A paid-off home plus retirement savings can put a household over Oregon’s line without anyone in the family thinking of themselves as wealthy.

Hypothetical example: a Washington resident who dies in late 2026 with a $4 million taxable estate would have $1 million above the $3 million exclusion. At Washington’s 10% bottom rate, that’s roughly $100,000 in state estate tax and nothing owed federally. This simplified illustration ignores deductions and valuation questions that would change the result in a real estate.

One common response is a credit shelter (or bypass) trust, which holds the first spouse’s state exemption amount instead of passing it outright to the survivor. Whether that structure fits depends on the size of the estate and how much flexibility the surviving spouse wants. Some families also weigh relocating to a state without an estate tax, a decision that rarely comes down to taxes alone. We’ve written a framework for deciding whether to move to a lower-tax state.

What the estate tax exemption doesn’t decide for you

An exemption tells you how much you can transfer without tax. It says nothing about how much you actually want to give away, or when.

With the federal deadline gone, families who were planning around 2026 have room to ask better questions. Would a gift to your kids at 35 help them more than an inheritance at 60? Do you still need the income from the assets you’d be giving away? Are your heirs ready to manage what they’d receive? Our piece on the timing of wealth transfer goes deeper on that first question, and the conversations estate documents can’t have covers the last one.

Giving during life also carries a tax trade-off the exemption math hides. Assets left at death generally receive a step-up in cost basis, which can erase built-in capital gains for heirs. Assets gifted during life keep your original basis. For a family well under the federal exemption, holding highly appreciated stock until death may save more in income tax than gifting it saves in estate tax.

That’s where estate planning and tax planning stop being separate projects. Brighton Jones’ Personal CFO model puts tax advisors and wealth advisors on the same team, so a gifting decision gets checked against your income tax picture before it’s made.

Estate tax planning strategies and the trade-offs behind them

Every one of these tools solves one problem by creating another. As we cover in the questions within every trust, the useful starting point is what you want the structure to do.

5 common estate tax planning strategies

1. Annual exclusion gifts. Up to $19,000 per recipient each year leaves your estate without using lifetime exemption. Trade-off: the money is gone if your own needs change.
2. Spousal lifetime access trusts (SLATs). A spousal lifetime access trust moves assets out of both spouses’ estates while the beneficiary spouse can still receive distributions. Trade-off: that indirect access depends on the marriage lasting.
3. Irrevocable life insurance trusts (ILITs). Policy proceeds stay outside the taxable estate, which matters most in low-exemption states. Trade-off: you give up control of the policy.
4. Charitable remainder trusts (CRTs). With a charitable remainder trust, you receive an income stream and a charitable deduction, and the remainder goes to charity. Trade-off: what goes to charity doesn’t go to heirs.
5. Credit shelter trusts for state exemptions. The first spouse’s state exemption gets preserved where portability doesn’t exist. Trade-off: added administration, and trust assets don’t get a second basis step-up at the survivor’s death.

Questions worth bringing to your advisor

1. Which state’s estate tax applies to me, including states where I own real estate?
2. If my spouse has already passed, was portability elected on a federal estate tax return?
3. Does my current will or trust use up the first spouse’s state exemption, or waste it?
4. Would gifting appreciated assets now cost my heirs a step-up in basis?
5. Was my estate plan written around a 2026 sunset that never happened?

Ready to explore how your estate tax exemption fits into your complete financial picture? Our Personal CFO approach helps you align your money with what matters most. Schedule your complimentary intro call.

Frequently asked questions

What is the federal estate tax exemption in 2026?

It’s $15 million per person, or $30 million for a married couple who elect portability. The amount is indexed for inflation each year. Estates below the exemption owe no federal estate tax, and the portion above it is taxed at rates up to 40%.

Did the estate tax exemption drop in 2026?

No. The One Big Beautiful Bill Act, signed in July 2025, removed the scheduled sunset that would have cut the exemption to about $7 million per person. The exemption rose to $15 million instead and has no scheduled expiration under current law.

Which states have an estate tax?

Twelve states and Washington, D.C.: Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont and Washington. Exemptions range from $1 million in Oregon up to $15 million in Connecticut, which matches the federal amount.

Is an estate tax the same as an inheritance tax?

No. An estate tax is paid by the estate before assets are distributed. An inheritance tax is paid by the person who receives the assets, and the rate often depends on their relationship to the person who died. The federal government levies only an estate tax.

Does portability apply to state estate taxes?

In most states, no. Oregon and Washington don’t let a surviving spouse use the first spouse’s unused state exemption. Couples in those states often rely on trust planning at the first death to preserve that exemption, something federal portability can’t do for them.

About the author: Zach Bergthold is a Tax Lead Advisor at Brighton Jones, working with clients from the firm’s Portland office. His work centers on tax planning for estates and trusts, from SLATs to charitable remainder trusts.

Standard Disclosure: Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Brighton Jones, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. To the extent that you have any questions regarding the applicability of any specific issue discussed above to your individual situation, you are encouraged to consult with the professional advisor of your choosing.

Hypothetical examples are for illustration only and do not represent actual client results. They are simplified and leave out tax rules that could change the outcome in a real estate. Tax figures are as of October 2026 and are subject to change.