The federal estate tax exemption is the dollar threshold below which your estate passes to heirs free of federal estate taxes. The federal estate tax exemption actually increases in 2026 to $15 million per individual (from $13.99 million in 2026) under the One Big Beautiful Bill Act, which eliminated the previously scheduled sunset provision.
This guide focuses specifically on what the 2026 estate tax changes mean for families in Prosper, Frisco, and surrounding North Texas communities, and what concrete steps you can take before the deadline hits.
Federal Estate Tax Definition: A federal tax imposed on the transfer of a deceased person’s estate to heirs, calculated on the taxable estate value exceeding the current exemption amount.
The most common mistake families make right now is assuming this change won’t affect them. If your home, retirement accounts, business interests, and life insurance policies add up to more than you think, you may be closer to the new threshold than you realize. Real estate values in Prosper and Frisco have climbed sharply over the past several years, and that growth changes the math fast.
What the 2026 Estate Tax Change Actually Means
Under the Tax Cuts and Jobs Act of 2017, the federal estate tax exemption nearly doubled. For 2026, the exemption sits at approximately $13.99 million per individual ($27.98 million for married couples). That number was previously set to sunset on December 31, 2026.
Starting January 1, 2026, the exemption increases to $15 million per individual ($30 million for married couples) under the One Big Beautiful Bill Act, with no sunset provision. Estates above that threshold will owe federal estate tax at rates up to 40%.
Portability: The IRS rule allowing a surviving spouse to use the deceased spouse’s unused exemption amount – but only if a federal estate tax return is filed, even if no tax is owed. For official guidance on portability and estate tax filing requirements, see the IRS estate tax resource center.
Families who have taken no action in 2024 or 2026 should still review their estate plans to ensure their documents and strategies align with the updated tax environment.
Acting Before 2026 vs. Waiting: Which Approach Holds Up?
Where acting before 2026 succeeds: You can use the current higher exemption for lifetime gifts, fund irrevocable trusts, and transfer appreciating assets out of your estate permanently. The IRS has confirmed it will not claw back gifts made under the higher exemption threshold.
Where acting before 2026 fails: Rushing without a plan can mean gifting assets you still need, creating liquidity problems, or using the wrong trust structure for your goals.
Where waiting until 2026 succeeds: Nothing. There is no meaningful tax advantage to waiting if your estate exceeds the applicable exemption threshold.
Where waiting until 2026 fails: You lose valuable time to put the right structures in place. Families with large estates benefit most from planning ahead, regardless of how the exemption is set. Families with estates approaching or exceeding $15 million face the greatest exposure.
The verdict: Families with combined estates that may approach or exceed applicable thresholds should be reviewing their options now. The strategies available shrink with every month of inaction.
Thinking about this for your situation? Let’s talk. Contact us and we’ll walk you through your options – no pressure.
Who in the Prosper and Frisco Area Is Most at Risk
North Texas families often underestimate their estate size. Add together your primary residence (median home values in Frisco now exceed $550,000), investment accounts, a small business or professional practice, life insurance death benefits, and retirement accounts – and the federal threshold becomes reachable faster than most people expect.
- Business owners in Collin County with real property and equipment
- Dual-income households with significant retirement savings and life insurance
- Landowners in Prosper whose acreage has appreciated dramatically
- Parents who inherited assets from their own parents and added to them over time
Texas has no separate state estate tax – which is an advantage compared to states like Oklahoma or Arkansas that layer on additional inheritance-related taxes. But that advantage does not eliminate the federal exposure, and it can make families complacent.
Your Federal Estate Tax 2026 Action Plan
- Step 1 – Get a Current Estate Valuation: List all assets – real estate, retirement accounts, business interests, life insurance death benefits. Many families discover their taxable estate is larger than expected once everything is totaled.
- Step 2 – Review Existing Documents: Check whether your current wills, trusts, and beneficiary designations are still aligned with your goals and reflect the current tax environment.
- Step 3 – Identify Gifting Opportunities: The IRS allows annual exclusion gifts of $19,000 per recipient (2026 and 2026) without using your lifetime exemption. Strategic gifting now reduces your taxable estate.
- Step 4 – Evaluate Trust Structures: Irrevocable trusts can remove assets from your estate while still providing benefits to family members. These take time to set up properly – starting late leaves fewer options.
- Step 5 – Coordinate with Your Financial Advisor: Tax planning, investment planning, and legal planning need to align. A strategy that works on paper can fail if it creates liquidity problems or conflicts with your retirement income needs.
- Step 6 – File Any Required Returns: If a spouse passed away after 2010 and no estate tax return was filed, portability may still be available through a late filing. Don’t assume that window is permanently closed without asking.
What to Gather Before Your Consultation
- ☐ Recent appraisals or tax assessments for real estate
- ☐ Most recent statements for all retirement and investment accounts
- ☐ Life insurance policy summaries showing death benefit amounts
- ☐ Business ownership documents and most recent valuation (if applicable)
- ☐ Copies of existing wills, trusts, and powers of attorney
- ☐ List of beneficiary designations on file for all accounts
Neighboring State Comparison: Estate Tax Exposure
| State | State Estate Tax | State Exemption | Federal Exposure in 2026 |
|---|---|---|---|
| Texas | None | N/A | Yes – federal only |
| Oklahoma | None | N/A | Yes – federal only |
| New Mexico | None | N/A | Yes – federal only |
| Arkansas | None | N/A | Yes – federal only |
| Louisiana | None | N/A | Yes – federal only |
All neighboring states mirror Texas in having no separate state estate tax as of 2026. That uniformity means the federal estate tax is the primary risk across the region – and it hits everyone equally.
Key Takeaways for Collin County Families in 2026
- The exemption increases January 1, 2026 – from roughly $13.99M to $15M per individual under the One Big Beautiful Bill Act
- Gifts made before the sunset are protected – the IRS confirmed no clawback on pre-2026 gifts
- Texas has no state estate tax – but federal exposure at 40% remains real
- Life insurance death benefits count – policies owned in your name inflate your taxable estate
- Acting in 2026 gives you the most options – trust structures take time to fund and finalize
At The Greg Hall Law Firm, located in Prosper, Texas, we work with families throughout Collin County – including clients in Frisco, Celina, McKinney, Allen, and Little Elm – on matters exactly like this one. For a full overview of how we can help, visit our services page.
Frequently Asked Questions
What is the federal estate tax exemption for 2026?
The federal estate tax exemption for 2026 is approximately $13.99 million per individual, or $27.98 million for married couples. This number was set under the Tax Cuts and Jobs Act and increases to $15 million per individual on January 1, 2026, under the One Big Beautiful Bill Act.
How does the estate tax exemption change in 2026?
The 2026 estate tax exemption increases to $15 million per individual ($30 million for married couples) under the One Big Beautiful Bill Act. Estates exceeding that threshold will owe federal estate tax at rates up to 40% on the amount above the exemption.
Does Texas have its own estate tax?
No – Texas does not impose a separate state estate tax. However, Texas residents are still subject to the federal estate tax, and the updated 2026 exemption applies equally regardless of which state you live in.
Can gifts made before 2026 help reduce my estate tax?
Yes, and the IRS has explicitly stated it will not claw back gifts made under the higher exemption. Strategic gifting in 2026 – including funding irrevocable trusts – can permanently reduce your taxable estate before any future law changes take effect.
How long does it take to set up a trust before the deadline?
A properly drafted and funded irrevocable trust typically requires four to twelve weeks to complete, depending on the complexity of the assets involved. Starting late in 2026 compresses that window and limits your options, which is why families should begin the process now.
What happens if I do nothing before 2026?
If your estate exceeds the applicable exemption and you take no planning steps, your heirs may owe federal estate tax at rates up to 40% on the excess amount. For a large estate in 2026, that could mean a significant tax bill, depending on deductions and the final exemption figure.
Should I talk to an attorney or a financial advisor first?
Both professionals play a role, but the legal structure of your plan – trusts, wills, and gifting strategies – needs to be reviewed by an attorney who understands the tax code. Coordination between your legal and financial team produces the best outcome and avoids strategies that work on paper but create cash flow problems in practice.
What to Do Right Now
The families who fare best through a tax law change like this are not necessarily the wealthiest. They’re the ones who started planning proactively – not after the fact. Recent shifts in real estate values across Prosper and Frisco have pushed many households into a planning zone they weren’t in just three years ago.
Ready to take the next step? Contact us today for straight answers and real solutions. Reviewing your estate plan now ensures you are positioned to take full advantage of the current exemption levels.
