Estate Tax 2026: What You Need to Know
September 2, 2025
The U.S. Federal Estate Tax Unified Credit (the “Credit”), which allowed individuals to leave up to $13,990,000 to their non-spouse heirs federal estate tax free, was set to expire on December 31, 2025. At that time, the law called for the Credit to drop to approximately $7,000,000 per person. Recent legislation increased the Credit by more than 7 percent beginning in 2026, to $15,000,000 per individual or roughly $30,000,000 per married couple, subject to adjustment for inflation.
The estate tax aligns with the lifetime gift tax exemption, meaning that the amount an individual or couple may give, estate tax free when they die, is reduced by the amount of taxable gifts given during life.
It is important to remember that New York taxpayers may still be subject to estate taxes. New York is one of only twelve states that currently assesses an estate tax (along with Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, Oregon, Rhode Island, Vermont and Washington, and the District of Columbia). The estate tax threshold in New York is currently $7,160,000, meaning an estate valued at $7,500,000 would be exempt from federal estate taxes but could pay New York estate taxes.
Complicating matters more is New York’s “cliff effect.” In 2025, a New York State taxable estate of $7,160,000 pays no estate tax. A New York State taxable estate of $7,200,000 pays $108,291 in estate tax. A mere $40,000 of assets over the New York credit results in paying $108,291 in New York tax! In cases like this, we work closely with our clients to implement options to reduce their taxable estate.
As for the tax rates on monies that are subject to federal estate taxes, the rates in 2026 will begin at 18 percent and graduate up to as high as 40 percent. For perspective, in 2001, the top estate tax rate imposed was 55 percent.
The bottom line: the number of estates that will pay federal or state estate taxes in 2026 will be very low. However, if your estate may reach those thresholds, it is critical to plan early and ensure your estate is protected and subject to the lowest possible tax burden allowed under the law. If you have questions or concerns about your estate planning, call me or any member of our trusts and estate team. We are here to help.
The Estate Planning Team at Gross Shuman PC has decades of experience assisting in the proper planning and execution of trust and estate documents. John F. Leone and his team are just a phone call away. Do not leave your lifetime of work at risk. Call today. 716-854-4300 ext. 243 or [email protected].
