H.R. 1 permanently set the federal estate, gift and GST tax exemption at $15 million per person for 2026, or $30 million for a married couple, and it is indexed for inflation. That changes the way wealthy families have to think about giving away assets, because the old instinct to move property out of an estate as early as possible is no longer the whole story.
People searching for 2027 IRS standard deduction amounts are often looking for next-year tax changes, but the bigger estate-planning shift is already here. Under P.L. 119–21, the exemption level is now high enough that far fewer estates will face transfer tax, which means the question is less about avoiding tax at any cost and more about which tax matters more when an asset moves.
The numbers show how small the taxable-estate universe already was before H.R. 1. IRS statistics put the number of estates filing taxable returns at 3,690 in 2023, 3,170 in 2022 and 2,584 in 2021, all below 4,000. In that setting, the new $15 million threshold, with inflation indexing, narrows the group that still needs aggressive transfer-tax planning and shifts attention toward what happens to an asset’s basis.
That basis issue is where the tradeoff becomes real. Assets received from a decedent generally get a fresh basis at fair market value under Sec. 1014, while gifted low-basis assets generally carry the donor’s basis over to the recipient. In plain terms, gifting can reduce estate tax exposure, but it can also leave the recipient with a built-in gain that may later be taxed. Holding the same asset until death can erase that gain for income-tax purposes.
That is why advisers often prefer to gift high-basis assets and keep low-basis assets until death. The result is not a one-size-fits-all rule, though. If an asset is expected to appreciate sharply, or if the transfer-tax savings from a gift are modest compared with the future income-tax cost, preserving the step-up may be the better move. H.R. 1 made that calculation more important, not less.
The catch is that the federal exemption is only part of the picture. State transfer taxes can still apply, and state exemptions are often smaller, so a family that is safely below the federal threshold can still run into a state-level tax problem. That leaves planners balancing three moving pieces at once: the size of the estate, the basis of the assets and the jurisdiction where the tax bill lands.
For most families, the new rule means the old reflex to give away assets early needs a second look. The estates most likely to matter now are the ones with large built-in appreciation, where the income-tax cost of losing a step-up can exceed the transfer-tax savings from a lifetime gift. In that sense, H.R. 1 did more than raise the exemption. It made the timing of a transfer, not just the size of the estate, the central tax decision.
