Legacy · 5 min read · Updated November 10, 2026

The 2026 estate and gift exemption, and annual exclusion gifting

Illustrative examples, education not advice.

In plain words

The federal government taxes large transfers of wealth, whether you give them away while alive (gift tax) or leave them at death (estate tax). The two taxes share one lifetime allowance, called the basic exclusion amount or simply the exemption.

For 2026, under the 2025 tax law, that exemption is $15 million per person. For deaths in 2025 it was $13.99 million. The 2025 law replaced a scheduled cut that would have roughly halved the amount, and it indexes the $15 million for inflation in later years. The tax rate on amounts above the exemption is 40%.

Separately, there is an annual exclusion. For 2026 you can give up to $19,000 to as many people as you like without using any of your lifetime exemption and without owing gift tax. A married couple can give $38,000 to each person.

The 2026 numbers

Item (2026)	Amount
Estate and gift basic exclusion, per person	$15,000,000
Married couple, with portability	Up to $30,000,000
Generation-skipping transfer exemption	$15,000,000
Annual gift exclusion, per recipient	$19,000
Annual exclusion for gifts to a non-citizen spouse	$194,000
Top estate and gift tax rate	40%

How it helps real people

Most families owe no federal estate tax. With $15 million per person, that is the reality for the vast majority of households.
Gifting can move growth out of an estate. For larger estates, a gift today removes the future growth on that asset from the estate.
Annual gifts add up. Steady $19,000 gifts to children and grandchildren can shift substantial value over time, with no paperwork in many cases.
Some payments do not count at all. Tuition paid directly to a school and medical bills paid directly to a provider are excluded from gift tax, on top of the annual exclusion.
Life insurance funding. Annual exclusion gifts are often used to pay premiums on a policy owned by an irrevocable trust.

A worked example

Illustrative. Frank and June, both 66, are fictional. They have an estate of about $24 million, three children and six grandchildren. They live in a state with no estate tax.

Annual gifts: Each year they give $38,000 (as a couple) to each of their nine children and grandchildren, about $342,000 a year. Over 10 years, that moves about $3.4 million out of their estate, plus any growth on it.
Tuition: They pay two grandchildren’s college tuition directly to the schools. That does not count against any limit.
Insurance: Part of the gifting goes to an irrevocable trust that pays premiums on a survivorship policy, giving heirs cash at the second death.

Their estate is already below the $30 million they could shelter together, so federal estate tax may never apply. But gifting still helps them see their family enjoy the money, and protects against future changes in the law.

These figures are illustrative only.

Who it’s for

Families with estates approaching or above the exemption.
People in states with their own estate or inheritance tax.
Grandparents who want to help with college, homes or starting a business.
Owners of fast-growing assets, such as a business, who want future growth to land outside their estate.

Who it’s not for

Anyone who may need the money later. Gifts are permanent. Your own retirement and care come first.
Families well below the exemption who are only gifting for tax reasons. For them, keeping assets until death can be better because heirs may get a step-up in basis.

Risks and trade-offs

Loss of control. Once given, the money belongs to the recipient.
Lost step-up in basis. Gifted assets keep your original cost basis. Inherited assets often get a new basis at death, which can erase capital gains.
Laws can change. The 2025 law has no scheduled end date for the $15 million amount, but future laws can change it.
State taxes. Some states have estate tax thresholds far below the federal level.
Filing requirements. Gifts above the annual exclusion, and gift-splitting between spouses, generally require filing a gift tax return, Form 709, even when no tax is due.

Common mistakes

Not filing Form 709 when a gift exceeds $19,000 to one person, or when spouses split gifts.
Gifting low-basis assets that would have received a step-up at death.
Forgetting portability. When the first spouse dies, the survivor generally needs a timely estate tax return to keep the unused exemption, even if no tax is owed.
Gifting to a trust without proper withdrawal notices, so gifts may not qualify for the annual exclusion.
Giving away money needed for retirement.

FAQs

Do I pay tax if I give my child $25,000?

Usually no tax is due. You would generally file Form 709, and $6,000 would reduce your lifetime exemption. Tax is only owed once lifetime gifts exceed the exemption.

Does the recipient pay tax on a gift?

No. Federal gift tax, when it applies, is owed by the giver. The recipient does not report it as income.

What is portability?

It lets a surviving spouse use the deceased spouse’s unused exemption. It must be elected on an estate tax return.

Can I give more than $19,000 to fund a 529 plan?

Yes. A special election lets you treat up to five years of annual exclusion gifts, up to $95,000 per child for 2026, as made over five years. A Form 709 is required.

Will the exemption go down again?

Under current law, it rises with inflation after 2026. Congress can always change it.

Your next step

Take the Wealth Strategy Score (/score/) to see how gifting and estate planning fit with the rest of your plan.

Education, not advice. Examples are illustrative. VeraLife.ai is not a registered investment adviser, broker-dealer or insurance agency.