Federal tax law is rarely stable, but 2026 marks a particularly significant moment. The tax provisions established by the Tax Cuts and Jobs Act of 2017 — which significantly changed estate planning across the country — were written with a built-in sunset, set to expire after 2025. Whether Congress has acted to extend, modify, or let those provisions expire by the time you read this, the practical message is the same: now is a good time to review your estate plan with a qualified attorney.
This article explains what changed under the TCJA, what the potential expiration means, and what older Americans should discuss with their advisors regardless of what Congress ultimately decides.
What the TCJA Changed for Estates
Before 2018, the federal estate tax exemption — the amount you can pass on to heirs free of federal estate tax — was approximately $5.5 million per person. The TCJA roughly doubled it, to approximately $12.9 million per person (adjusted for inflation each year). For a married couple with proper planning, that meant up to $27 million could pass to heirs estate-tax-free.
This change meant that the vast majority of Americans no longer had any federal estate tax exposure. The number of taxable estates filed per year dropped significantly after 2018.
The TCJA sunset clause meant these higher exemptions were scheduled to expire after 2025, reverting to roughly pre-2018 levels — approximately $7 million per person (inflation-adjusted). Whether that sunset took full effect, was extended, or was modified by legislation passed in 2025–2026, is something your estate attorney can confirm for your current situation.
What This Means in Practice
If the exemption did decline, some estates that previously had no federal estate tax exposure may now be partially exposed. This is not a large number of people — federal estate taxes have always applied to a small fraction of the population — but the group that's affected is exactly the audience that should be paying attention: older Americans who own homes, retirement accounts, life insurance policies, and other assets that have appreciated over decades.
The most important thing to understand about estate taxes is that the exposure often isn't obvious from looking at your bank account. Life insurance death benefits count toward the taxable estate. Retirement account balances count. Home equity counts. A couple who owns a paid-off home, has grown retirement accounts, and carries life insurance may have a larger estate than they realize.
What Has NOT Changed
The annual gift exclusion — the amount you can give to any individual in a given year without using any of your lifetime exemption — has not been affected by the TCJA sunset. It has been adjusted upward for inflation and allows meaningful wealth transfer without any gift tax filing. Married couples can combine their exclusions to give even more.
Step-up in cost basis at death — the provision that resets the taxable gain on assets inherited by heirs, effectively eliminating capital gains tax on appreciation during the owner's lifetime — has remained in place through multiple rounds of tax debate and is currently still the law.
Actions Worth Discussing With an Attorney
Review your current estate plan. If your documents were written before 2018 or haven't been reviewed since, your plan may be optimized for a tax environment that no longer exists — or may be missing strategies that are now important.
Understand your actual estate value. Many people significantly underestimate what they're worth on paper. A simple accounting of home value, retirement accounts, investment accounts, and life insurance face values often surprises people.
Consider whether gifting makes sense. Annual gifts to children and grandchildren reduce the taxable estate over time and provide family members with money when they may need it most.
Revisit beneficiary designations. Retirement accounts and life insurance pass directly to named beneficiaries and never go through your will. Outdated beneficiary designations — a former spouse, a deceased relative — can cause serious problems that no amount of estate planning will fix.
The National Academy of Elder Law Attorneys maintains a directory of attorneys who specialize in estate planning for older adults.