The federal estate tax exemption is now “permanent” at $15 million per person ($30 million for a married couple) starting in 2026, after the 2025 tax law repealed the scheduled “sunset” that would have cut it roughly in half. For the vast majority of Arizona families, this confirms what was already true: you will owe zero federal estate tax, and Arizona has no estate or inheritance tax of its own. The catch? The tax was never the real reason most families need an estate plan — and that hasn’t changed at all.
The short version
- $15 million per individual / $30 million per married couple is the 2026 federal estate & gift tax exemption.
- It’s now “permanent” (indexed to inflation) — the 2026 drop back to about $7 million is off the table. When I say “permanent” I mean at least until Congress decides to change the law again in the future, but for now, there is no planned sunset of the law.
- Arizona has no state estate tax and no inheritance tax. Most Arizona families owe $0 in death taxes, full stop.
- The annual gift tax exclusion for 2026 is $19,000 per recipient.
- Because the tax rarely applies, the real work of an Arizona estate plan is avoiding probate, protecting minor or vulnerable heirs, and keeping your family out of court — none of which the new law touches.
What actually changed in 2025
For years, estate planners have been racing a clock. The exemption created by the 2017 Tax Cuts and Jobs Act was set to “sunset” at the end of 2025, dropping from roughly $14 million back to an inflation-adjusted figure near $7 million per person in 2026. Families with larger estates were being urged to “use it or lose it” before the deadline.
That deadline is gone. The One Big Beautiful Bill Act (Public Law 119-21), signed on July 4, 2025, amended the tax code to set the basic exclusion amount at $15 million per person for 2026 and to make it permanent, with annual inflation adjustments going forward. The same $15 million figure applies to the lifetime gift tax exemption and the generation-skipping transfer (GST) tax exemption.
“Permanent,” of course, means “until Congress changes it again.” But it removes the artificial 2026 cliff that was driving a lot of rushed, fear-based planning.
The 2026 numbers that matter
| Figure | 2026 amount |
|---|---|
| Federal estate & gift tax exemption (per person) | $15,000,000 |
| Combined exemption for a married couple | $30,000,000 |
| Generation-skipping transfer (GST) tax exemption | $15,000,000 |
| Annual gift tax exclusion (per recipient) | $19,000 |
| Top federal estate tax rate (on amounts above the exemption) | 40% |
| Arizona state estate tax | None |
| Arizona inheritance tax | None |
Does Arizona have its own estate or inheritance tax?
No. Arizona does not impose a state estate tax, and it has no inheritance tax on what your heirs receive. Arizona’s estate tax effectively ended in 2005 when the federal credit it was tied to was phased out, and the state has not reinstated one. So for an Arizona resident, the only death tax in the picture is the federal estate tax — and that applies only to the portion of an estate above $15 million (or $30 million for a couple who plans correctly).
Put plainly: if your total estate — home, retirement accounts, life insurance, business interests, and everything else — is under $15 million, federal estate tax is almost certainly not your problem.
If you’re under $15 million (that’s about 99% of families)
Here’s the part the headlines miss. Estate tax has never been why most Arizonans need a plan. Well over 99% of estates in the country fall below the exemption and owe no federal estate tax at all. The reasons a plan matters are the ones that have nothing to do with the IRS:
1. Avoiding probate
Arizona probate is public, typically takes six to eighteen months, and adds cost and delay for your family at the worst possible time. A properly funded revocable living trust keeps your assets out of the probate process entirely. This is the core of what we do: keeping families out of probate court. (See our overview of how probate works in Arizona and our guide to the Arizona living trust.)
2. Protecting minor or young children
A will is where you name a guardian for minor children. Without one, an Arizona judge decides who raises them. And leaving money outright to an 18-year-old rarely ends well — a trust lets you control when and how they receive it.
3. Blended families
If either spouse has children from a prior relationship, the default rules can accidentally disinherit someone you love. Blended families need deliberate design so that both your spouse and your children are protected. (More on how trusts solve this.)
4. Incapacity — the “cruise ship scenario”
Ask yourself a simple question: if you were suddenly unreachable — think of being on a cruise ship with no phone for two weeks, except you can’t come back — who could pay your bills, manage your business, and make your medical decisions? Estate planning isn’t only about death; a durable financial power of attorney and a healthcare power of attorney handle incapacity so your family avoids a court-ordered guardianship or conservatorship.
5. A family member with special needs
An outright inheritance can disqualify a loved one from means-tested benefits like SSI or Medicaid. A special needs trust lets you provide for them without cutting off the support they rely on.
At AVID, we put it plainly: your real legacy isn’t measured in dollars — it’s how easy, or how hard, you make it for your loved ones to move forward without you. The new tax law doesn’t touch any of these goals. If anything, it clears away the tax noise so you can focus on what a plan is actually for.
If you’re near or above $15 million / $30 million
The permanence is genuinely good news, but larger estates still have real work to do — the exemption is a ceiling, not a plan:
- Portability isn’t automatic. A surviving spouse can only use the first spouse’s unused exemption (reaching the full $30 million) by filing a federal estate tax return (Form 706) to elect portability — even when no tax is due. Miss it, and half the shelter can be lost.
- Annual gifting still compounds. At $19,000 per recipient per year, a couple can move meaningful wealth out of a taxable estate over time with no gift tax return.
- Advanced tools remain relevant for concentrated or fast-growing assets — spousal lifetime access trusts (SLATs), grantor retained annuity trusts (GRATs), irrevocable life insurance trusts, and business-succession structures. These matter most when a business or investment is expected to appreciate well beyond the exemption.
- Business owners should coordinate their estate plan with a succession plan so the company transfers cleanly. (See our business succession planning services.)
Because the deadline pressure is gone, these strategies can now be done thoughtfully rather than in a year-end panic.
What you should actually do now
The 2025 law is a good prompt to check that your plan still reflects your life. Review it if any of these are true:
- Your plan was built around the old 2026 sunset (some plans have “formula clauses” tied to the exemption that can now behave in unintended ways).
- You’ve married, divorced, had children, or lost a loved one since you signed.
- You’ve bought a home, started or sold a business, or your net worth has changed significantly.
- You’ve moved to Arizona from another state (your documents should reflect Arizona law).
- You don’t have a plan at all — or only a will, with no strategy to avoid probate.
Frequently asked questions
What is the federal estate tax exemption for 2026?
For 2026, the federal estate and gift tax exemption is $15 million per individual and $30 million for a married couple. Under the One Big Beautiful Bill Act (signed July 2025), this amount is permanent and adjusted for inflation each year.
Does Arizona have an estate tax or inheritance tax?
No. Arizona has neither a state estate tax nor an inheritance tax. The only potential death tax for an Arizona resident is the federal estate tax, which applies only to estates above the $15 million (or $30 million per couple) exemption.
Will the estate tax exemption drop in 2026?
No. The scheduled 2026 “sunset” that would have cut the exemption to roughly $7 million was repealed by the 2025 tax law. Instead, the exemption rose to $15 million per person and was made permanent.
Do I still need an estate plan if I won’t owe estate tax?
Yes. For most Arizona families the estate tax never applied. A plan’s real jobs are avoiding probate, naming guardians for children, handling incapacity through powers of attorney, protecting vulnerable heirs, and controlling how and when your assets pass — none of which the tax law affects.
How much can I give away tax-free in 2026?
You can give up to $19,000 per recipient in 2026 without using any of your lifetime exemption or filing a gift tax return. Gifts above that amount simply reduce your $15 million lifetime exemption; they rarely trigger an out-of-pocket tax.
What is portability, and do I have to do anything to get it?
Portability lets a surviving spouse use the deceased spouse’s unused exemption, so a couple can shield up to $30 million. It is not automatic — the surviving spouse (or estate) must file a federal estate tax return (Form 706) to elect it, even when no tax is owed. Missing the election can forfeit millions in shelter.
Does the $15 million exemption cover my life insurance and retirement accounts?
Your taxable estate generally includes almost everything you own or control at death — your home, retirement accounts, business interests, and life insurance you own. Add it all up; if the total is under $15 million (or $30 million for a couple), no federal estate tax is due. If you’re close to the line, owning life insurance through an irrevocable trust is one way to keep it out of the taxable estate.
Talk it through with an Arizona attorney
The tax cliff is gone, but the reasons to plan — probate, family protection, incapacity, and control — are exactly what they always were. If you’d like a plain-English look at whether your plan (or lack of one) still fits your life, schedule a free consultation with AVID Esq. Group. We offer flat-fee estate planning and serve families throughout the East Valley and all of Arizona, in person and virtually.
This article is general information about Arizona and federal law as of 2026 and is not legal or tax advice. Figures are subject to change; please confirm current numbers and how they apply to your situation with an attorney.
