H.R. 1 permanently set a $15 million per person federal estate, gift and GST exemption for 2026, and indexed that amount for inflation. For married couples, the exemption is $30 million. That changes the way wealthy families weigh lifetime gifts against simply holding assets until death.
That is why searches around 2027 tax brackets are landing on estate planning: the higher exemption means fewer estates will owe federal transfer tax, but it does not erase the income tax consequences of passing property at death. Assets inherited from a decedent generally get a basis adjustment to fair market value under Sec. 1014, while gifted low-basis assets usually carry over the donor's basis to the recipient for future gain calculations.
The numbers show how small the federal estate-tax pool already was before H.R. 1. IRS statistics show taxable estate tax returns totaled 3,690 in 2023, 3,170 in 2022 and 2,584 in 2021, all below 4,000. With a larger, inflation-indexed exemption, even fewer estates are likely to face federal estate tax, which pushes more of the planning focus toward income tax results instead of transfer tax savings alone.
That shift is real, but it is not absolute. Lifetime gifts can still make sense when holding periods are long and growth rates are high, especially if the asset will appreciate enough that removing future growth from the estate matters more than preserving a step-up in basis. The harder choice usually comes with low-basis property, where keeping the asset until death can erase built-in gain, while high-basis assets are often better candidates for gifting.
For decades, high-net-worth planning centered on reducing estate, gift and generation-skipping transfer taxes through lifetime transfers. The 2017 Tax Cuts and Jobs Act already made income tax planning more important, and many advisers kept recommending gifts to use exemptions that were expected to expire. H.R. 1 changed that landscape by making the larger exemption permanent, but it did not create a one-size-fits-all answer. Estate size, age, tax rate differences, growth rates, built-in appreciation and asset type still drive the decision, and state transfer taxes remain a separate problem because state exemptions are often smaller.
The practical result is that the old rule of thumb has flipped for many families: transfer taxes are no longer the only objective, and they are not always the main one. For some estates, the best answer is still to give. For others, especially those holding low-basis assets, the better move is to wait, preserve the step-up and let Sec. 1014 do the work at death.
