Estate Tax Exemption 2026: What the One Big Beautiful Bill Means for Ohio Families

What Is the Estate Tax Exemption for 2026

The federal estate tax exemption for 2026 is $15 million per person. This is the total value of assets you can transfer at death without owing any federal estate tax. Married couples can combine their exemptions through a process called portability, sheltering up to $30 million from federal estate tax.

This is a permanent increase from the prior exemption of approximately $13.99 million per person in 2025. Under prior law, the exemption was scheduled to drop to roughly $7 million per person at the end of 2025 when the Tax Cuts and Jobs Act provisions were set to expire. The One Big Beautiful Bill eliminated that scheduled sunset and raised the exemption to $15 million, indexed for inflation going forward.

For most Ohio families, the practical effect is that federal estate tax is no longer a concern. The vast majority of estates fall well below the $15 million threshold. The more pressing issues for Ohio families are typically probate avoidance, asset protection, and the new trust provisions discussed below.

What Is the Federal Estate Tax Exemption

The federal estate tax exemption is the total value of assets a person can transfer at death without owing federal estate tax. For 2026, that amount is $15 million per person under the One Big Beautiful Bill. Amounts above the exemption are taxed at rates up to 40 percent.

The exemption applies to the total taxable estate, which includes real estate, bank accounts, investment accounts, retirement accounts (in some cases), life insurance proceeds payable to the estate, and business interests. Assets transferred to a surviving spouse through the unlimited marital deduction are generally not subject to estate tax at the first death, but they become part of the surviving spouse's taxable estate.

Ohio repealed its state estate tax in 2013. Ohio residents only face federal estate tax exposure, not a separate Ohio estate tax. This makes Ohio a relatively favorable state for estate planning compared to states like Massachusetts or Oregon, which have their own estate taxes with much lower exemption thresholds.

What Is the Current Estate Tax Exemption

The current federal estate tax exemption is $15 million per person as of 2026. This is the amount established by the One Big Beautiful Bill, which was signed into law in 2026. The exemption is now permanent and indexed for inflation, meaning it will increase gradually each year to keep pace with rising asset values.

Prior to this law, there was significant uncertainty about what would happen to the exemption. The Tax Cuts and Jobs Act of 2017 had temporarily doubled the exemption, but those provisions were set to expire at the end of 2025. The One Big Beautiful Bill resolved that uncertainty by making the higher exemption permanent and raising it further to $15 million.

For Ohio families who had been holding off on estate planning decisions because of that uncertainty, the new law provides a stable framework to plan around. However, the trust provisions discussed below introduce a new layer of complexity that was not present before.

What Is the Estate Tax Exemption for 2025

The federal estate tax exemption for 2025 was approximately $13.99 million per person. This was the inflation-adjusted figure under the Tax Cuts and Jobs Act of 2017, which had temporarily doubled the exemption from its pre-2018 level of approximately $5.49 million.

The One Big Beautiful Bill, signed in 2026, replaced the 2025 figure with a new permanent exemption of $15 million per person. If you are reviewing an estate plan that was drafted in 2024 or 2025, the exemption figures referenced in that plan may no longer be accurate. This is one reason why an annual or biennial review of estate planning documents is worth the time.

The annual gift tax exclusion also increased under the new law. The annual gift tax exclusion for 2026 is $19,000 per recipient, up from $18,000 in 2025. This means you can give up to $19,000 per year to any number of individuals without using any of your lifetime exemption or owing gift tax.

The Trust Double Taxation Problem: What Ohio Families Need to Know

While the higher exemption is good news for most families, a buried provision in the One Big Beautiful Bill introduces a significant problem for families with certain types of trusts. The provision limits specific deductions for trusts, which can result in income inside the trust being taxed twice: once at the trust level and again when distributed to beneficiaries.

The trusts most likely to be affected include special needs trusts, QTIP trusts (Qualified Terminable Interest Property trusts used in second-marriage planning), and certain charitable trusts. These are not exotic tax shelters. They are standard planning tools used by ordinary Ohio families to protect a disabled family member's government benefits, provide for a surviving spouse, or support a charitable cause.

The double taxation risk is particularly acute for special needs trusts. A special needs trust is designed to hold assets for a beneficiary with a disability without disqualifying them from Medicaid or Supplemental Security Income. The new deduction limitation means that income earned inside the trust may face a higher effective tax rate than anticipated, reducing the assets available for the beneficiary's care over time.

If you have an existing special needs trust, QTIP trust, or other family trust, the most important step right now is to have an estate planning attorney review the trust document and model the tax impact of the new provision. In some cases, restructuring the trust or changing the investment strategy inside the trust can reduce the exposure. Learn more about special needs trusts in Ohio and how the new law affects them.

What Ohio Families Should Do Now

For families whose estates are well below $15 million, the One Big Beautiful Bill is largely good news. The threat of a sharp reduction in the exemption has been eliminated, and the higher permanent exemption provides more room for gifts and transfers during your lifetime.

However, the trust provisions mean that "good news on the exemption" does not mean "no action needed." There are three specific situations where Ohio families should act now.

First, if you have an existing trust of any kind, have an attorney review whether the new deduction limitation affects the trust's tax treatment. This is a targeted review, not a full estate plan overhaul, and it can typically be completed in one meeting.

Second, if you have been putting off estate planning because of uncertainty about the exemption, that uncertainty is now resolved. The $15 million permanent exemption provides a stable foundation for planning. A complete estate plan -- will, trust, power of attorney, and healthcare directive -- is worth completing now while the law is settled.

Third, if you have a special needs trust or are considering one for a family member with a disability, the new law makes professional guidance more important than ever. The interplay between the trust deduction limitation, Medicaid eligibility rules, and the beneficiary's specific needs requires careful analysis. See our overview of Ohio estate planning for more on how trusts fit into a complete plan.

This article is for general informational purposes only and does not constitute legal advice. Estate planning laws and individual circumstances vary. The One Big Beautiful Bill provisions described above reflect the law as understood at the time of publication. Consult a licensed Ohio attorney for advice specific to your situation.