IRS Raises 2027 Estate and Gift Tax Exemption to $15.48 Million

The Internal Revenue Service announced an increase in the federal estate and gift tax exemption for 2027. The "basic exclusion amount" will rise to $15.48 million per person, up from $15 million in 2026. This exemption applies to tax-free transfers both during life and at death, although state-level exemptions can be lower.

Along with the exemption increase, the IRS adjusted figures for other tax provisions, including federal income tax brackets, capital gains tax brackets, and eligibility for the earned income tax credit. These inflation adjustments come as Americans face rising costs for housing, groceries, and gasoline.

The estate and gift tax exemption was last raised significantly by legislation under President Donald Trump, setting it at $15 million per person. Without the current change, the exemption would have reverted to the 2017 level of $5 million plus inflation adjustments after 2025. According to the Tax Policy Center, about 6,890 federal estate tax returns are expected to be filed in 2026, with approximately 3,900 being taxable.

This adjustment affects estate planning and tax liabilities for high-net-worth individuals, influencing how much wealth can be transferred without federal estate tax. The change impacts the threshold at which federal estate taxes apply, potentially affecting estate tax revenues and planning strategies.