Estate Tax Changes: Why the New $15 Million Exemption Isn't the Whole Story for Families with $1M-$10M

Why The 2026 Headline Is Not The Whole Story

The 2026 estate tax exemption of $15million per person has led many American families to conclude they no longerneed an estate plan. For globally mobile families with assets between $1million and $10 million, the picture is more nuanced than the headlines suggest.

This article explains what actually changed when the One Big Beautiful Bill Act (OBBBA) took effect on January 1, 2026,what did not change, and why, for mass-affluent American families with cross-border lives, the new exemption is not the whole story.

What Actually Changed

The One Big Beautiful Bill Act (OBBBA),signed into law in 2025, permanently sets the federal estate, gift, and GST tax exemption at $15 million per individual for deaths and gifts occurring on or after January 1, 2026. A married couple, using portability, can shelter $30million combined. Beginning in 2027, the $15 million figure is indexed for inflation using 2025 as the base year.

The practical significance of OBBBA is not the size of the exemption, it is the fact that it is permanent. Under the 2017Tax Cuts and Jobs Act (TCJA), the higher exemption was scheduled to sunset at the end of 2025 and revert to roughly half its level. OBBBA eliminated that cliff. Families who had been rushing through irrevocable trust structures tolock in the higher exemption before the sunset now have the time they thought they were about to lose.

The top federal estate tax rate remains 40%on the portion of an estate above the exemption.

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What Did Not Change

Several important features of the US transfer tax system sit outside OBBBA and are unaffected by the headline number.

The annual gift tax exclusion remains$19,000 per recipient in 2026, the same as in 2025. A married couple can jointly gift $38,000 per recipient per year without consuming any lifetime exemption. Gifts to a non-US citizen spouse are capped at $194,000 in 2026(indexed) before the remainder begins consuming the lifetime exemption, a figure that catches many mixed-nationality couples off guard.

The $60,000 estate tax exemption to non-resident aliens on US-situs assets also did not change. A non-US spouse, a foreign family member, or a non-US investor holding US stock or US real estate directly is still working with a $60,000 exemption, not $15 million. This is acritical point for mixed-nationality families and is often the single most consequential estate tax issue in a cross-border household.

State-level estate taxes were untouched byOBBBA. States set their own rules. Massachusetts continues to tax estates above$2 million and does not index for inflation. Oregon's threshold remains $1million. New York's exemption is $7.35 million for 2026, with a well-known"cliff" that can cause the entire estate to be taxed if it exceedsthe exemption by more than 5%. Washington, Hawaii, Illinois, Maine, Maryland, Minnesota, Rhode Island, Vermont, Connecticut, and the District of Columbia allmaintain their own estate taxes, and several states also impose inheritancetaxes on recipients.

What This Means for Families with $1M to $10M

For mass-affluent American families with worldwide assets between $1 million and $10 million, the federal estate tax is unlikely to be the primary concern, even before applying portability. For most families in this range, a single person's exemption is already more than the entire estate. This is the real, practical change OBBBA delivers: planning can focus on other things.

What I observe most often is that the $15million headline leads families to assume OBBBA eliminates every question they had about their estate. For globally mobile, mass-affluent families, it actually changes the mix of what matters, not whether estate planning matters at all.

The considerations that often loom larger for globally mobile families with $1M to $10M fall into a few categories.

State estate taxes. A family domiciled in Massachusetts with $4 million in assets is above the state threshold regard less of federal rules. Portability at the federal level does not apply at the state level in most states, meaning the first-to-die's state exemption can be lost if it is not used at the first death.

Assets held abroad. For US citizens, worldwide assets count toward the federal estate tax. A US citizen who dies holding a UK flat, a Swiss bank account, or a property in Portugal sees those assets included in the US estate. Foreign death duties in the host country may also apply. Estate tax treaties (the US has around 15) can reduce or eliminate double taxation, but they require careful coordination.

The non-US spouse. If one spouse is not a US citizen, assets passing to that spouse do not qualify for the unlimited marital deduction unless they pass through a Qualified Domestic Trust (QDOT). A mixed-nationality couple cannot simply rely on the doubled exemption; thestructural question matters.

Portability (DSUE). The Deceased Spousal Unused Exclusion allows a surviving spouse to use the unused federal exemption of the first-to-die, but only if a Form 706 is filed in time, even when no estate tax is due. Missed filings are common and costly.

Gift planning remains live. The permanent$15 million exemption does not make smaller lifetime gifts pointless. The annual $19,000 exclusion, the indexed spousal limits for non-citizen spouses, and direct-pay medical and education exclusions still apply and remain valuable in cross-border situations.

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Federal and State Exemptions at a Glance (2026)

Illustrative comparison of 2026 federal and selected state estate tax exemptions for individuals. State-level rules, rates,and cliffs vary widely; this table is educational, not exhaustive.

Questions To Raise With A Qualified Adviser

For a globally mobile American family with assets in the $1M to $10M range, a short list of questions to raise with a qualified tax or estate attorney and a cross-border financial planner includes:

• What is my state of domicile, and does that state have its own estate tax?
• If I own property or investment assets abroad, how are they treated for US estate tax, and does a US estate tax treaty apply?
• If my spouse is not a US citizen, what structure (for example, a Qualified Domestic Trust) would be appropriate to preserve the marital deduction?
• If my spouse predeceases me, will our executor file Form 706 to preserve portability (DSUE), even if no taxis owed?
• Should annual exclusion gifting be part of our plan, even without the 2025 sunset pressure?
• How are our current documents(will, revocable trust, beneficiary designations) coordinated across the jurisdictions we live in and hold assets in?
• The OBBBA change is significant. For most cross-border families with $1M to $10M, the higher federal exemption clears the ground to focus on the issues that were always the more important ones.