Introduction
In October 2025, the IRS announced the revised federal estate tax exemption and gift tax limit for 2026. The federal estate tax exemption 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. Whether the value of a person’s estate falls above or below that limit, it is critical to develop an estate plan to assist in transitioning the farm to the next generation. Understanding the potential for estate and/or gift tax liability should be part of this planning process.
Federal Estate Taxes
For 2026, the federal estate tax exemption increases to $15 million for an individual and $30 million for a couple. This increase is not due to inflation but, instead, 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 passed initially in 2017.
One last note on federal estate taxes: a surviving spouse has an unlimited marital deduction. This means a predeceasing spouse can transfer assets to the surviving spouse estate tax-free. Additionally, 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. It is important to consult qualified estate planning attorneys and accountants to ensure that the surviving spouse satisfies the requirements for portability.
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 per year.
How Does This Impact Producers?
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 an estate exceeding the federal 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 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 taxes. Along with a tax advisor, producers should consider working with additional team members, such as an attorney and a financial planner, to begin developing a succession plan for their operation.
Goeringer, Paul. “Federal Estate Tax and Gift Tax Limits Announced For 2026.” Southern Ag Today 5(51.5). December 19, 2025. Permalink
