Estate Planning Opportunities Under New 2026 Tax Law

Authored by: Greg Patel — Partner, CPA | Date Published: February 23, 2026

For thousands of families, the countdown to 2026 felt like a ticking clock on their legacy. When the estate tax exemption was scheduled to drop from $14 million to $7 million per person. Families who thought they were prepared found themselves caught in a whirlwind of irrevocable trusts and rushed asset valuations, desperate to protect their businesses before the year ended.

The introduction of the One Big Beautiful Bill Act (OBBBA) marked a significant shift in federal tax policy. By securing bipartisan support, Congress made the elevated estate and gift tax exemptions permanent fixtures of the tax code. This legislative action removed the previous sunset provision, which had been a primary source of timeline-based uncertainty for taxpayers. Consequently, the focus of estate planning has transitioned from mitigating the risks of changing exemption limits to establishing a long-term structure for wealth transfer and legacy management.

Let’s discuss what this means for you.

What is the Change to Colorado Tax Credits?

Starting this year, the estate tax exemption jumps to $15 million per person (up from $13.99 million in 2025), with inflation-indexed annual adjustments. Married couples using portability, which allows a surviving spouse to use any unused portion of their deceased spouse’s exemption, can combine their exemptions for a $30 million shield against federal estate taxes.

Are There Changes to Gift Tax & GST?

The Gift Tax and Generation-Skipping Transfer (GST) Tax exemptions now align with the estate tax exemption. This is a crucial moment for multi-generational wealth transfer. You can gift $15 million to your children and another $15 million to a dynasty trust for your grandchildren, all without triggering federal transfer taxes.

While the exemptions are generous, the top estate tax rate remains a flat 40% on amounts exceeding the threshold. For estates worth $50 million plus, that’s still a significant loss. The goal isn’t just to stay under the exemption. It’s to structure assets intelligently so appreciation, income, and future growth occur outside your taxable estate.

Is the OBBBA Permanent?

The term “permanent” in tax law is relative. While the OBBBA has no built-in sunset, a future Congress could repeal or reduce these exemptions. That said, the 2026–2030 window represents a “Goldilocks period” for wealth transfer planning. Exemptions are high, the rules are clear, and we have time to execute sophisticated strategies without the panic of an impending deadline.

How Can I Lock In Appreciation with Strategic Gifting?

The annual gift tax exclusion rises to $19,000 per recipient in 2026 (up from $18,000 in 2024). This might not sound exciting, but consider this:

A couple with three married children and six grandchildren can transfer $456,000 annually without even touching their $30 million lifetime exemption. Over 10 years, that’s $4.56 million moved out of your estate, completely tax-free.

How to Strategize High-Growth Assets

Here’s where smart planning makes all the difference. Sitting on assets about to explode in value? Commercial real estate in an emerging market? A family business on the verge of scaling up? 2026 is your year.

Once an asset leaves your estate through gifting, all future appreciation leaves too. For example, if you gift a $5 million business interest today, fast-forward to your death when it’s worth $20 million, that growth just escaped estate tax entirely. That’s a $6 million savings at the 40% rate.

The step-up in basis at death survives under the OBBBA, and this creates a planning opportunity:

Gift: High-growth, low-basis assets (future appreciation escapes your estate)
Keep: Low-growth, high-basis assets (your heirs receive a step-up in basis at death, eliminating capital gains liability)

What Are the Essential Planning Tools for Business Owners?

With the estate tax exemption secure through 2033, you can finally step away from panic-driven planning. This is a welcome shift, as the most effective wealth preservation strategies demand careful consideration, not last-minute decisions. Now, with time on your side, here are three powerful tools to consider.

SLATs (Spousal Lifetime Access Trusts)

If you’re married and worried about “locking up” your wealth in an irrevocable trust, a Spousal Lifetime Access Trust (SLAT) might be your answer. Here’s how it works. You gift assets to a trust for your spouse and kids. Those assets are out of your taxable estate, but your spouse can still access the money if life throws you a curveball. It’s estate planning with some retained flexibility.

Dynasty Trusts

Want to protect your wealth not just for your kids, but for your grandkids and beyond? Dynasty trusts use the $15 million GST exemption to shield assets from estate taxes for every generation. Plus, they offer protection from creditors, divorce settlements, and poor financial decisions.

Business Succession

The OBBBA also made the 20% Qualified Business Income (QBI) deduction under Section 199A permanent. If you’re a family business owner, this isn’t just a tax break. It’s a cash flow stabilizer that makes it easier to fund buy-sell agreements, key-person life insurance, and transition plans. Knowing that the 20% deduction will be there for years to come allows for long-term strategic planning that wasn’t possible in the past.

What Are the New Rules for Charitable Planning?

Starting in 2026, itemized charitable deductions are subject to a 0.5% of adjusted gross income (AGI) floor. Meaning the first 0.5% of your AGI donated to charity doesn’t generate a deduction. If you have $1 million in AGI, that’s $5,000 of charitable giving that produces zero tax benefit.

The solution? Bunching. Instead of giving $20,000 per year for five years, donate $100,000 in year one, clear the AGI floor, and maximize the deduction. Then, distribute the funds over the next five years using a Donor-Advised Fund (DAF). You get the tax benefit upfront, the charity gets predictable income, and you’ve turned a potential loss into a strategic win.

What is the difference between Charitable Lead and Charitable Remainder Trusts?

If you’re in the top tax bracket, these two tools can make a significant impact:

Charitable Lead Trusts (CLTs): Transfer appreciating assets to your heirs at a reduced tax cost while providing income to charity for a set period. Great if you want to support a cause and reduce gift taxes.
Charitable Remainder Trusts (CRTs): You receive income now, the charity gets the remainder later, and you get an immediate tax deduction. It’s a win-win if you’re looking to offset high income.

Conclusion

The “rush” is over. The panic has subsided. But just because the exemption isn’t ending doesn’t mean you can afford to ignore estate and gift tax planning. Now is the time for a quality review of your estate plan. A thoughtful, comprehensive analysis of how the new rules interact with your unique financial situation. Ask yourself:

Are your trusts still fit for purpose?
Is your gifting aligned with your long-term goals?
Are you taking full advantage of the annual exclusion, the QBI deduction, and the new charitable planning opportunities?

Estate planning is about having a clear strategy, and that requires your accountant and your attorney to be on the same page. We work with estate planning attorneys so that your plan works legally and tax-efficiently.

Ready to secure your legacy? Let’s talk. Partner with MBE CPAs to turn this opportunity into a plan for your family’s long-term financial success.