The $15 Million Estate-Tax Exemption and Portability in 2026

In 2026 a widow can hold two federal exclusions at once: her own basic exclusion amount of $15,000,000, and whatever unused exclusion her late spouse’s executor carried over to her through the portability election. They are not interchangeable. The law spends them in a fixed order, indexes one and not the other, can withdraw the second if you marry again and are widowed again, and extends none of it to the generation-skipping transfer tax.

By the end you should know what exclusion you actually hold, whether a missed election can still be repaired, how lifetime gifts and a possible remarriage bear on it, and what to put on the agenda for your next meeting with estate counsel.

Two exclusions, only one of which moves

The 2025 tax law, Public Law 119-21, signed July 4, 2025, wrote a basic exclusion amount of $15,000,000 into section 2010 of the Internal Revenue Code. The IRS confirms that figure for estates of decedents dying in 2026, up from $13,990,000 for 2025. After 2026 the statute indexes it for inflation, in steps rounded to the nearest $10,000.

Your total shelter, the applicable exclusion amount, is that basic exclusion plus, for a surviving spouse, the deceased spousal unused exclusion, or DSUE. The DSUE is figured on your spouse’s estate tax return as the lesser of the basic exclusion amount in effect at your spouse’s death or the part of your spouse’s own exclusion left unused. It is then a fixed figure: the statutory inflation adjustment runs to the basic exclusion amount, not to the DSUE.

Suppose your spouse died in 2026, had made no taxable gifts, and left the entire estate to you in a form that qualified for the marital deduction. The DSUE could be as much as $15,000,000, and your applicable exclusion for 2026 as much as $30,000,000. An earlier death, lifetime gifts, or bequests to children leave a smaller figure. Ask for the number on the filed return, not an estimate.

The election belonged to your spouse’s executor

DSUE exists only if your spouse’s executor filed a complete Form 706 on time and elected portability; the regulations make that election a condition of your using it, during life or at death. The filing requirement for the election applies regardless of the size of the estate. The return is due nine months after the date of death, and Form 4768 can secure an automatic six-month extension of time to file.

An estate large enough to require a return anyway, which for a 2026 death means a gross estate plus adjusted taxable gifts and any specific exemption above $15,000,000, makes the election on that return and within its statutory deadline. Our guide to whether an estate tax return is required walks through that test.

Treat that return as part of your own permanent file. When you apply the DSUE, the regulations allow the IRS to examine your spouse’s return even after the period of limitations on assessment has expired, and to adjust or eliminate the DSUE it reports. Keep the appraisals and workpapers behind it.

A missed election can sometimes be repaired within five years

Rev. Proc. 2022-32 provides a simplified route to a late election. It is available when the deceased spouse died after December 31, 2010, was a U.S. citizen or resident at death, and was survived by a spouse, and when the executor was not required to file an estate tax return based on the gross estate and adjusted taxable gifts, and did not file on time. The executor then files a complete and properly prepared Form 706 on or before the fifth anniversary of the date of death, stating at the top that it is filed pursuant to Rev. Proc. 2022-32 to elect portability under section 2010(c)(5)(A).

Two limits matter most to a larger family. The relief is not available to an estate that was required to file, whose deadline is fixed by statute; if relief is granted and the estate later proves to have been over the threshold, the grant is void from the start. And the late election does not reopen an expired refund period for gift or estate tax you may already have overpaid. Beyond the five-year window, the Form 706 instructions say an estate may seek relief under Regulations section 301.9100-3, a request for an IRS letter ruling. Estate Tax Portability: How to Preserve a Spouse’s Unused Exclusion covers the mechanics.

Your spouse’s exclusion is spent before your own

The gift tax regulations fix the order: when a surviving spouse who holds DSUE makes a taxable gift, the DSUE is applied before the survivor’s own basic exclusion amount (26 CFR 25.2505-2(b)). You do not choose.

Suppose you hold $15,000,000 of DSUE and make $4,000,000 of taxable gifts in 2026, reported on Form 709. The gifts use $4,000,000 of DSUE, leaving $11,000,000 of DSUE and your own basic exclusion intact. Gifts of a present interest within the annual exclusion, $19,000 per recipient for 2026, are subtracted before taxable gifts are figured, so they draw on neither amount. Our guide to gift reporting when helping family explains when Form 709 is required.

The rule has one advantage: it consumes the fixed amount first and preserves the one that is indexed. Whether a large gift is wise is a separate judgment, involving control, your own income needs, and the basis the recipient takes.

Remarriage, and the last deceased spouse

DSUE is tied to your last deceased spouse: the most recently deceased person who was married to you at the time of that person’s death. The regulations provide that this identity is determined on the day of each taxable gift, or at your death, and that remarriage by itself neither changes it nor prevents you from using the DSUE. If a later marriage ends in divorce or annulment, the former spouse’s death does not displace your first spouse.

The exposure arises if you remarry and your new spouse dies before you. That spouse becomes your last deceased spouse whether or not that estate elected portability or had any DSUE to give. The earlier spouse’s unused DSUE is then lost, and you take whatever the new spouse’s executor elects, which may be nothing.

Remarriage does not cost you your late spouse’s exclusion; outliving your next spouse can.

The exception concerns DSUE you have already used. Under 26 CFR 25.2505-2(c) and 20.2010-3(b), an earlier spouse’s DSUE that you applied to taxable gifts stays counted. In the regulations’ own hypothetical, a widow with $5,000,000 of DSUE applies $2,000,000 to gifts, remarries, and is widowed again, and her second husband’s executor elects portability of a $2,000,000 DSUE. Her DSUE becomes $4,000,000, his $2,000,000 plus the $2,000,000 of her first husband’s that she had already applied. The $3,000,000 she had not used is gone. Under these rules, once a later spouse’s death displaces the earlier one, only the part of the earlier DSUE already applied to lifetime taxable gifts survives. Remarriage after widowhood covers the wider consequences.

The generation-skipping exemption does not transfer

Portability does not carry over the generation-skipping transfer (GST) exemption, which shelters transfers to grandchildren and other skip persons. The Code sets each individual’s GST exemption equal to the basic exclusion amount, $15,000,000 for 2026, not to the applicable exclusion amount that includes DSUE (26 U.S.C. § 2631). Your spouse’s own GST exemption could be allocated only by your spouse or your spouse’s executor.

That makes the first estate’s Form 706 decisive. The executor could allocate the deceased spouse’s GST exemption on Schedule R, and any portion left unallocated is assigned under the deemed-allocation rules. For property left to you in a QTIP marital trust, a section 2652(a)(3) election keeps the deceased spouse as the transferor of the trust for GST purposes, so that spouse’s exemption can reach it; the election must cover all the property in the trust. Allocations, once made, are irrevocable. Ask to see what was done.

State estate taxes keep their own ledger

A state that imposes its own estate or inheritance tax applies its own thresholds and definitions, and a plan built on a $30,000,000 federal shelter can still leave a state liability. New York, for example, sets its own basic exclusion amount at $7,350,000 for deaths in 2026. Its official guidance requires a resident estate to file when the federal gross estate plus includible gifts exceeds that amount; the addback generally reaches taxable gifts made during the three-year period ending at death, subject to listed exceptions. A nonresident estate can also have a filing duty when New York real or tangible property is present and the filing measure exceeds the state exclusion.

Do not assume a state recognizes federal DSUE or copies the federal filing threshold. A state may have no portability, a separate election, a different exclusion, its own QTIP rules, or a filing obligation even when no federal Form 706 is otherwise required. Counsel should create a state-by-state table for domicile, real property, tangible property, prior gifts, and any state return or election due. A federal portability election alone does not establish a state result.

Questions to ask your estate counsel

1. Did my spouse’s executor elect portability, what DSUE does the return report, and where are the return, proof of filing, and appraisals kept?
2. If no return was filed, was the estate under the filing threshold for the year of death, and are we still within five years of the date of death?
3. What is my applicable exclusion today: my 2026 basic exclusion plus DSUE, less anything already applied to taxable gifts?
4. Would taxable gifts now make sense, given that they use DSUE first, and what would I give up in control, income, and basis?
5. If I remarry, what happens to my DSUE if my new spouse dies first, and should a prenuptial agreement address a portability election by that spouse’s executor?
6. How was my spouse’s GST exemption allocated, and was a section 2652(a)(3) election made for any marital trust?
7. Which state estate or inheritance taxes could apply where I live or own real property, and does that state give any effect to federal DSUE?
8. How will we review the plan as the basic exclusion is adjusted for inflation each year?

This article provides general U.S. educational information and is not legal, tax, or investment advice. Confirm current rules with the IRS and a qualified estate-planning attorney or tax professional who knows your facts.