The basic exclusion allows individuals to transfer substantial wealth tax-free either during their lifetime or after death, building upon baseline levels previously set under Donald Trump. This federal adjustment arrived alongside standard inflation revisions for income brackets, capital gains, and earned income tax credits. Even with the expanded limits, local inheritance taxes may still affect estates in jurisdictions with lower thresholds. Ultimately, the federal levy reaches only a minimal segment of the population, leaving the vast majority of households entirely unaffected.
Key points
Congressional action averted a steep drop back to 2017 exemption levels that had previous…: Congressional action averted a steep drop back to 2017 exemption levels that had previously spurred proactive wealth planning.
High-net-worth individuals can transfer millions more tax-free, though state-level estate…: High-net-worth individuals can transfer millions more tax-free, though state-level estate and inheritance exemptions may remain substantially lower.
The vast majority of Americans remain completely untouched by the tax because it applies…: The vast majority of Americans remain completely untouched by the tax because it applies only to a tiny fraction of estates.
Sources checked by our analysis pipeline: 1
The Internal Revenue Service has announced a higher estate and gift tax exemption for 2027.
In its announcement Thursday, the agency increased the federal "basic exclusion amount" to $15.48 million per person for 2027, up from $15 million in 2026. The exemptions apply to tax-free transfers during life and at death.
State estate and inheritance tax exemptions can be lower.
The IRS also increased figures for dozens of other provisions, including federal income tax brackets, the capital gains tax brackets and eligibility for the earned income tax credit, among others.
The inflation adjustments for 2027 come as Americans wrestle with affordability amid the rising cost of housing, groceries, gasoline and other living expenses.
President Donald Trump's "big beautiful bill" increased the estate and gift tax exemption to $15 million per person. Without the change from Congress, the exemption would have reverted to 2017 levels — $5 million plus an inflation adjustment — after 2025, which spurred proactive estate planning from ultra-wealthy families before the legislation.
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These inflation-adjusted thresholds will impact the returns that households file during the 2028 tax season. The changes are pegged to consumer price index data to prevent taxpayers from being pushed into higher brackets solely because of cost-of-living increases. The updates also lift deduction levels as families continue to manage broader affordability pressures across housing, groceries, and fuel.