Federal Estate Tax Exemption 2026: What Ohio Families Need to Know

For most Ohio families, this is genuinely good news. For years, estate planning attorneys across the country were warning clients about the "estate tax cliff," a scheduled drop in the federal exemption from approximately $13 million to $7 million that was set to take effect on January 1, 2026. That cliff is now gone. The $15 million exemption is permanent law, adjusted annually for inflation.

That said, the elimination of the estate tax cliff does not mean estate planning is less important. It means one specific concern is resolved. Trusts, wills, powers of attorney, and healthcare directives remain essential for every Ohio family, regardless of estate size. The federal estate tax is only one piece of a much larger picture.

What is the federal estate tax exemption for 2026?

The federal estate tax exemption for 2026 is $15 million per individual. A married couple can combine their exemptions through a process called portability, which means a married couple can pass up to $30 million to their heirs free of federal estate tax.

The exemption applies to the total taxable estate, which includes cash, real estate, investments, business interests, life insurance proceeds payable to the estate, and other assets. Gifts made during your lifetime that exceed the annual gift tax exclusion (currently $19,000 per recipient per year) also count against your lifetime exemption.

Estates that exceed the $15 million threshold are taxed at a top federal rate of 40 percent on the amount above the exemption. For a $20 million estate, that means $5 million is subject to a potential $2 million federal estate tax. At that level, trust structures and other planning strategies become critical.

Does Ohio have an estate tax or inheritance tax?

Ohio does not have a state estate tax or a state inheritance tax as of 2026. Ohio repealed its state estate tax in 2013, making it one of the more favorable states for estate planning from a tax perspective.

This is a common source of confusion for Ohio families. Many people assume Ohio has an inheritance tax because neighboring states like Pennsylvania and Kentucky do. Pennsylvania imposes an inheritance tax ranging from 4.5 to 15 percent depending on the relationship to the deceased. Kentucky imposes an inheritance tax on more distant relatives and non-relatives. Ohio does not.

Ohio residents are only subject to the federal estate tax, which applies to estates exceeding $15 million per person in 2026. For the vast majority of Ohio families, the federal estate tax is not a concern. The more pressing estate planning issues are probate avoidance, asset protection, and ensuring that the right people have legal authority to act if you become incapacitated.

Will the estate tax exemption drop in 2026?

No. The estate tax exemption will not drop in 2026. The One Big Beautiful Bill Act permanently extended the $15 million exemption and removed the sunset provision that was scheduled to reduce the exemption to approximately $7 million on January 1, 2026.

Prior to the Act, the Tax Cuts and Jobs Act of 2017 had temporarily doubled the estate tax exemption, but included a sunset provision that would have expired at the end of 2025. Estate planning attorneys and financial advisors spent years warning clients to plan around this cliff. The One Big Beautiful Bill Act resolved the uncertainty by making the higher exemption permanent.

The $15 million exemption will be adjusted for inflation in future years. It is not a fixed number. But the structure is now permanent, and the risk of a sudden halving of the exemption is gone.

What the Change Means for Ohio Estate Plans

If your estate plan was built around the assumption that the exemption would drop to $7 million in 2026, it may need to be reviewed. Some families created irrevocable trusts, made large gifts, or restructured their estates specifically to reduce exposure to the anticipated lower exemption. Now that the higher exemption is permanent, those strategies may be unnecessary or may have created unintended consequences.

Common issues to review include: irrevocable life insurance trusts (ILITs) created to pay anticipated estate taxes that may no longer be needed at the same scale; spousal lifetime access trusts (SLATs) funded with large gifts to remove assets from the taxable estate; and annual gifting programs that were accelerated in anticipation of the sunset. None of these strategies are necessarily wrong, but they should be reviewed in light of the new permanent law.

For families whose estates are well under $15 million, the more important estate planning priorities remain the same: a revocable living trust to avoid probate, a durable power of attorney to authorize someone to manage finances if you become incapacitated, a healthcare power of attorney and living will to direct medical decisions, and beneficiary designations on all financial accounts and life insurance policies.

Ohio Estate Planning and the $15 Million Exemption: Practical Takeaways

For Ohio families with estates under $5 million, the federal estate tax is not a current concern. The priority is probate avoidance, asset protection, and making sure the right people have legal authority. A revocable living trust, properly funded, accomplishes all three.

For Ohio families with estates between $5 million and $15 million, the federal estate tax is not an immediate concern under current law, but planning should account for the possibility that the exemption could change again in the future. Flexible trust structures that can adapt to law changes are preferable to rigid irrevocable structures.

For Ohio families with estates above $15 million, the 40 percent federal estate tax on amounts above the exemption remains a significant planning issue. Strategies including irrevocable trusts, family limited partnerships, charitable remainder trusts, and grantor retained annuity trusts (GRATs) are still relevant and should be reviewed with an estate planning attorney.

This article is for general informational purposes only and does not constitute legal advice. Federal and Ohio estate tax laws are subject to change. The information above reflects the law as understood at the time of publication (July 2026). Consult a licensed Ohio attorney for advice specific to your situation.