IRS Releases 2026 Exemption and Exclusion Amounts

On October 9, 2025, the Internal Revenue Service (IRS) issued Revenue Procedure 2025-32, providing the annual inflation adjustment amounts for tax provisions to be used by individual taxpayers for the 2026 calendar year. The adjustments include the following:

• The estate, gift, and generation-skipping transfer tax exemptions for 2026 are $15 million, reflecting the increased exemption amount under the One Big Beautiful Bill Act; this is an increase from $13,990,000 for transfers in 2025.

• The annual exclusion for gifts remains $19,000 for calendar year 2026.

• For 2026, the first $194,000 of gifts (other than gifts of future interests in property) to a spouse who is not a citizen of the United States are not included in the total amount of taxable gifts made during that year, an increase from $190,000 for 2025.

Takeaways: The increase in the basic exclusion amount means you will be able to transfer an additional $1,010,000 free of transfer tax liability in 2026 compared to 2025. Your estate planning attorney can help you determine whether it makes sense to take advantage of the planning opportunities created by this increase. If it applies to your situation, it would be wise to consult both your attorney and your financial planner about potential tax-minimization strategies as it may be beneficial to act sooner rather than later, as a future Congress could repeal or reduce the new exemption amount. The $19,000 annual exclusion amount for gifts remains unchanged for the first time since 2021, following yearly increases in 2022, 2023, 2024, and 2025.