The Internal Revenue Service released updated tax provisions for 2027, increasing the federal basic exclusion amount applicable to estate and gift taxes. The new exemption threshold stands at $15.48 million per individual, representing an increase from the $15 million figure that applied during the current year. This exclusion amount determines how much individuals can transfer tax-free during their lifetimes and upon death.
The IRS announcement, made Thursday, encompassed adjustments beyond estate and gift taxes. The agency modified numerous tax-related provisions to account for inflation, including federal income tax brackets, capital gains tax brackets, and eligibility thresholds for the earned income tax credit. State-level estate and inheritance tax exemptions may differ from these federal figures.
The 2027 exemption represents the continuation of changes from recent legislation that significantly elevated the exclusion amount from its previous trajectory. Without congressional action, the exemption would have declined to 2017 levels—approximately $5 million adjusted for inflation—following 2025. The legislative change prompted considerable estate planning activity among wealthy families seeking to take advantage of the higher limits.
Currently, the federal estate tax affects a limited portion of the American population. Tax Policy Center estimates indicate that during 2026, roughly 6,890 federal estate tax returns will be filed, with approximately 3,900 resulting in tax liability. The inflation adjustments announced for 2027 occur amid broader economic conditions marked by affordability concerns across multiple sectors, including housing, food, and energy costs.
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