For several years, estate planning professionals and clients alike were preparing for a major change on January 1, 2026—the scheduled “sunset” of the federal estate tax exemption. Under prior law, the exemption was set to drop back to pre-2018 levels, potentially cutting the amount families could pass on tax-free by more than half.

That sunset never happened.

In 2025, Congress passed and the President signed the One Big Beautiful Bill Act (OBBBA), which permanently eliminated the planned sunset. As a result, the federal estate tax exemption did not revert in 2026. Instead, it increased.

The New Federal Estate Tax Exemption

Beginning January 1, 2026:

• $15 million per individual
• $30 million for married couples

Even further, the exemption is not frozen at that level. Starting in 2027, it will continue to be adjusted annually for inflation.

For many families, this change significantly reduces—or completely eliminates—federal estate tax exposure for the foreseeable future.

What This Means for Estate Planning

While the higher exemption provides welcome relief, it does not mean estate planning is no longer necessary. Your estate plan still serves critical purposes beyond tax minimization, including:

• Ensuring assets pass according to your wishes
• Protecting minor children or vulnerable beneficiaries
• Planning for incapacity
• Avoiding unnecessary court involvement and delays

Plans that were created during a period of uncertainty may now benefit from a review to ensure they still align with your goals under the current law.

A Reminder About State Estate Taxes

It’s also important to remember that some states impose their own estate or inheritance taxes, often with exemption amounts far lower than the federal level.

The good news for Californians:
California does not have a state estate tax or inheritance tax.

However, if you own property or have ties to another state, state-level estate tax planning may still be relevant.

Looking Ahead

The elimination of the 2026 sunset brings stability to federal estate tax planning, but laws can and do change. Keeping your estate plan up to date ensures it continues to reflect both current law and your personal wishes.

If you have questions about how these changes affect your estate plan, the team at Widlast Legal is here to help.