Federal Estate Tax and Gift Tax Limits Announced For 2026

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         In October 2025, the IRS announced the revised federal estate tax and gift tax limits for 2026. Click here to read the announcement.  The federal estate tax limit will rise from $13.99 million in 2025 to $15 million in 2026.  The federal gift tax exclusion will remain at $19,000 per recipient. In Maryland, the state estate tax limits will stay at $5 million.

Federal Estate Taxes

         For 2026, the federal estate tax limit increases to $15 million for an individual and $30 million for a couple.  This increase is not due to inflation but due to the passage of the One Big Beautiful Bill Act, P.L. 119-21, July 4, 2025. This made permanent the existing estate tax exemption originally passed in 2017.  A deceased person owes federal estate taxes on a taxable estate.  The taxable estate is the gross estate minus allowable expenses and deductions.  See Lynch, Goeringer, and Musser, Estate Planning for Maryland Farm Families: Updated for 2014 (FS-972, 2014). Click here to read the fact sheet.

         For example, a couple with a taxable estate of $32 million passes away in 2026.  The couple’s heirs may exempt up to $30 million from federal estate taxes, leaving them to pay federal estate taxes on $2 million.  

         One last note on federal estate taxes: a surviving spouse has an unlimited marital deduction. The surviving spouse can include the predeceasing spouse’s unused federal estate tax limit in their federal estate tax limit. This concept is known as portability; more on it can be read by clicking here.

Federal Gift Tax Limit

         Federal tax law allows each taxpayer to gift up to $19,000 per year to one individual without incurring federal gift taxes. The federal gift tax limit will remain at $19,000 in 2026. This exemption is tied to inflation but can only increase by $1,000.

Maryland Estate Tax Limit

         In 2018, Maryland’s state estate tax exemption was set at $5 million and will remain at $5 million until changed by the General Assembly. The state estate tax exemption for a couple in Maryland is $10 million. In 2018, the General Assembly allowed unused Maryland estate tax exemption portability, similar to federal portability. The maximum tax rate is 16 percent, and the Maryland inheritance tax remains unchanged.

         In 2012, Maryland created a unique program that exempts up to $5 million of qualified agricultural property from Maryland estate taxes. To be eligible, the agricultural property must remain in agriculture for the next ten years. To learn more about this program, see this report written by Lynch, Goeringer, and Musser here.

How Does This Impact You?

         Benjamin Franklin once wrote, “In this world, nothing can be said to be certain, except death and taxes.” With that in mind, farm families concerned about hitting the top federal or state estate tax exemption need to begin working on farm succession and estate plans to limit potential estate taxes down the road. Working with a tax advisor early on can help limit your taxes and devise a tax plan to keep the farm in operation for future generations. Failure to properly plan can force surviving family members to sell family assets to pay inheritance taxes. Along with a tax advisor, consider working with additional team members, such as an attorney and financial planner, to begin developing the family’s farm succession plan.

        For those who need to develop estate tax plans, you should discuss with your farm succession team whether the increases in the estate tax limits affect your strategy. Although this change may not affect your succession plan, it allows you to discuss other changes in the farming operation over the past year.