Every year, the Internal Revenue Service (IRS) and the New York Department of Taxation and Finance (the Department) update the monetary thresholds applicable to estate, gift and generation-skipping transfer (GST) tax exemptions, as well as income tax marginal rates. The IRS and the Department recently released the inflation adjusted figures for the 2026 calendar year, as detailed below. (1) The majority of this blog post pertains to the federal estate, gift, and GST tax, but we also discuss the federal fiduciary income tax applicable to estates and trusts and the Department’s inflation adjustment for the 2026 New York basic exclusion amount applicable to estates.
Federal Estate, Gift, and GST Tax
Basic Exclusion Amount: The basic exclusion amount (aka the “Unified Estate and Gift Tax Exemption”) reflects the maximum amount that an individual can transfer during their lifetime without incurring a transfer tax. In 2026, the basic exclusion amount is $15 million, an increase of $1,010,000 from $13,990,000. For married couples, the basic exclusion amount in 2026 is $30 million ($15 million x 2). A taxpayer’s estate is subject to a 40 percent tax to the extent it exceeds the basic exclusion amount. Note, the $15 million federal basic exclusion amount was made “permanent” (i.e. will not revert absent Congressional action) by the One Big Beautiful Bill Act and it will be adjusted for inflation annually.
Generation-Skipping Transfer Tax Exemption: The GST exemption was also increased to $15 million per taxpayer for 2026, up from $13,990,000 in 2025.
Annual Gift Tax Exclusion: The annual gift tax exclusion remains at $19,000 for 2026, the same amount applicable to 2025. If married taxpayers elect on a gift tax return to affirmatively split gifts (i.e., treat all gifts as if each spouse contributed one-half of the amount), they may effectively transfer up to $38,000 ($19,000 x 2) to any recipient without incurring a gift tax or utilizing any of the taxpayers’ basic exclusion amounts. In order to qualify for the annual gift tax exclusion, however, the gift must be of a present interest, as future interests are not eligible.
Annual Gift Tax Exclusion for Transfers to Non-U.S. Citizen Spouses: Spouses may make unlimited transfers to a U.S. citizen spouse, free of gift tax. There is a limitation, however, for gifts to non-U.S. citizen spouses. In 2026, a spouse may gift up to $194,000 to a non-U.S. citizen spouse, free of gift tax, an increase of $4,000 over the $190,000 exclusion for the 2025 calendar year.
Federal Income Tax
The highest marginal tax bracket for estates and trusts is 37 percent. This rate applies to each dollar of taxable income in excess of $16,000 during the 2026 calendar year, an increase of $350 over the $15,650 threshold in 2025. To the extent possible, fiduciaries of estates and trusts should be mindful of tax planning opportunities by distributing income to beneficiaries, as the 37% maximum tax bracket for single individuals and joint filers during 2026 is $640,600 and $768,700, respectively.
State Estate Tax Exemption
Connecticut’s estate tax exemption matches the federal one, with a 12 percent flat rate applicable to the portion of the taxable estate that exceeds it.
New York’s 2026 basic exclusion amount of $7,350,000 is much lower although it represents an increase of $190,000 over the $7,160,000 amount for 2025.
The Massachusetts Estate Tax exemption remains at $2 million, as it is not indexed for inflation.
None of the above states’ exclusions are portable between spouses and must be used or the unused amount is lost.
Conclusion
Given the complexity of the federal and New York tax regimes, estate and tax planning can seem overwhelming. The attorneys at Harris Beach Murtha are highly skilled and experienced in preparing estate plans and transferring assets with optimizing wealth transfer tax planning. Please do not hesitate to contact any of our attorneys for assistance with your estate, trust, and tax planning needs.
Our Trusts and Estates Practice Group routinely tracks these types of matters. If you have questions or concerns, or need help with estate planning, please reach out to attorney Myles B. Fischer at (518) 701-2718 and mfischer@harrisbeachmurtha.com; attorney Lisa M. Powers at (585) 419-8869 and lpowers@harrisbeachmurtha.com; attorney Christopher J. Hartman at (518) 701-2786 and chartman@harrisbeachmurtha.com; attorney Suzanne Brown Walsh at (860) 240-6041 and
swalsh@harrisbeachmurtha.com; attorney Alfred R. Casella at (860) 240-6048 and acasella@harrisbeachmurtha.com; or the Harris Beach Murtha attorney with whom you most frequently work.
This alert is not a substitute for advice of counsel on specific legal issues.
Harris Beach Murtha’s lawyers and consultants practice from offices throughout Connecticut in Bantam, Hartford, New Haven and Stamford; New York state in Albany, Binghamton, Buffalo, Ithaca, New York City, Niagara Falls, Rochester, Saratoga Springs, Syracuse, Long Island and White Plains, as well as in Boston, Massachusetts, and Newark, New Jersey.
[1] See Rev. Proc. 2025-32
