The federal estate tax exemption for 2027 is $15,480,000 per person, up from $15,000,000 for 2026, under IRS Revenue Procedure 2026-35. The annual gift tax exclusion rises to $20,000 per recipient. Very few clients will owe estate tax, but gifts above the annual exclusion still need a Form 709, and a surviving spouse usually needs a Form 706 to keep the unused exemption.
Key takeaways
- The 2027 basic exclusion amount is $15,480,000 per person; the annual gift exclusion is $20,000 per recipient.
- A gift above the annual exclusion needs a Form 709 even when no tax is due; for 2026 gifts it is due April 15, 2027.
- Gift-splitting between spouses only works if it is elected on Form 709.
- Portability of a deceased spouse’s unused exemption requires a filed Form 706, even for a small estate.
- A lifetime gift ledger per client stops the firm from rebuilding gift history from memory years later.
What is the estate tax exemption for 2027?
On November 5, 2026 the IRS published its 2027 inflation adjustments in news release IR-2026-133 and Revenue Procedure 2026-35. The basic exclusion amount for people who die in 2027 is $15,480,000, up from $15,000,000 for deaths in 2026. The same figure caps lifetime taxable gifts, because the gift and estate taxes share one unified exemption.
2027 is the first year the new permanent exemption moves with inflation, so the number will now drift upward each fall rather than jump or fall with legislation. The annual gift exclusion also rises, and that is the figure most of your clients will actually touch.
| Figure | 2026 | 2027 |
|---|---|---|
| Basic exclusion amount (estate and lifetime gifts) | $15,000,000 | $15,480,000 |
| Annual gift exclusion per recipient | $19,000 | $20,000 |
| Annual exclusion for gifts to a non-citizen spouse | $194,000 | $201,000 |
Figures are from the IRS release above. The IRS estate tax page explains how the exclusion, prior taxable gifts and the gross estate fit together.
Why does a $2 billion estate headline matter to ordinary clients?
This week Forbes reported that Michael Jackson’s estate is now worth around $2 billion, alongside a family dispute over access to it. Stories like this put estate tax in front of clients who will never come close to the exemption, and they will ask you about it.
The honest answer for most households is that federal estate tax will not apply to them. The work that does apply is paperwork: gift returns for larger family gifts, a portability election when a spouse dies, and records that let an executor prove what was given and when. Those tasks are small one at a time and expensive to reconstruct later.
So treat the headline as a prompt to run a short, targeted outreach, not a mass email about estate tax rates. The aim is to find the clients who made or plan large gifts, those who recently lost a spouse, and those whose assets are growing quickly enough that the exemption could matter one day.
Which clients should a tax firm contact before the 2027 filing season?
Use your existing client data to sort households into four groups. The table below is a decision aid the team can apply in an afternoon from last year’s returns and engagement notes.
| Client signal | Likely need | Action before April 15, 2027 |
|---|---|---|
| Helped a child buy a home, paid a large sum for a relative, or funded a trust in 2026 | Form 709 for 2026 gifts | Ask for amounts, dates and recipients by January |
| Married couple who gave more than $19,000 to one person in 2026 | Gift-splitting election on Form 709 | Confirm both spouses consent; prepare returns |
| Spouse died in the last five years and no Form 706 was filed | Possible late portability election | Review eligibility; collect estate asset values |
| Business owners and clients with fast-growing assets | Long-term exemption and state tax planning | Book a planning meeting; refer to an estate attorney |
Everyone else can receive a short note confirming the new figures and asking them to tell you about any gift over $20,000 to one person in 2027. That single sentence catches most of next year’s Form 709 work early.
Worked example: gift-splitting and Form 709 for a home deposit
Here is an illustrative case with invented figures. In June 2026, Daniel paid $60,000 from his own account toward his daughter’s first home. He and his wife Rosa made no other gifts to her that year.
Without gift-splitting: Daniel’s gift exceeds the $19,000 annual exclusion by $41,000. He files a Form 709. No tax is payable, but $41,000 of his basic exclusion is used.
With gift-splitting: Daniel and Rosa elect to treat the gift as made half by each. Each is treated as giving $30,000, which is $11,000 over the exclusion. Each spouse generally files a Form 709, and only $22,000 of combined exclusion is used instead of $41,000.
The same gift made in 2027 would be $10,000 over the $20,000 exclusion for each spouse if split. The 2026 returns are due April 15, 2027, and an extension of the income tax return also extends the gift tax return; see the IRS Form 709 page for the current instructions. The lesson for the firm is that the election only exists if someone asks about the gift before the deadline.
Portability: the estate filing many firms miss
When a married person dies, the unused part of their exclusion, the deceased spousal unused exclusion (DSUE), can pass to the surviving spouse. It does not pass automatically. The executor must elect it on a timely filed Form 706, even if the estate is far below the filing threshold.
A Form 706 is normally due nine months after the date of death, with an extension available. For estates that were not otherwise required to file, Revenue Procedure 2022-32 gives a simplified route to make a late portability election within five years of death. Whether a client qualifies depends on the facts, so confirm the rules on the IRS estate tax pages or with an estate attorney before promising anything.
Why it matters now: with an indexed exemption, a preserved DSUE could shield a growing estate decades from now. The cost of the filing today is small compared with the value of the option.
What to collect for a portability-only Form 706
- Death certificate and date of death
- Will or trust documents and the executor’s details
- Asset list with approximate values at the date of death
- Joint account and beneficiary designations
- Any prior Form 709s filed by the deceased
How should a firm keep a lifetime gift ledger for each client?
Every Form 709 builds on the ones before it. The return asks for prior taxable gifts, and an executor will need the full history when the estate return is prepared. If that history lives in old PDFs on a departed staff member’s drive, someone will rebuild it at great cost.
Keep one ledger per client with these columns:
- Year of gift and date filed
- Recipient and relationship
- Gift value and valuation method (cash, appraisal, entity valuation)
- Annual exclusion applied and whether gift-splitting was elected
- Taxable gift and cumulative exclusion used
- Remaining exclusion against the current year’s basic exclusion amount
For example, a client who has used $2,000,000 of exclusion in earlier years would show $13,480,000 remaining against the 2027 figure. Update the remaining column each November when the IRS releases new numbers, and store the signed returns and any appraisals next to the ledger so an executor can find them.
Which gift tax mistakes cost clients the most?
The errors that cause real damage are rarely about tax owed. They are about missing records and missed elections that cannot easily be fixed later.
- No Form 709 for a large gift because “no tax was due”. The return records the exclusion used. Without it, an executor may struggle to prove the history, and the statute of limitations on valuing the gift may never start to run.
- Gift-splitting assumed, not elected. Couples often believe gifts are automatically shared. If the election is not made on a filed return, the full amount is treated as one spouse’s gift.
- Non-cash gifts with no valuation. Shares in a family company, a vacation home or a partnership interest need a supportable value. A rough guess on the return invites questions later.
- Payments to a student instead of the school. Tuition paid directly to the institution is excluded from gift tax; money handed to the grandchild to pay the bill is an ordinary gift.
- Portability ignored because the estate was small. This is the most expensive omission over a long retirement, because the surviving spouse’s assets may grow for decades.
Each of these comes from the same root cause: the firm did not ask the right question at the right time. A one-line gift question in every engagement and organizer closes most of the gap.
A November-to-April timetable for estate and gift work
Gift returns share the April 15 deadline with individual returns, so they get crowded out. Spread the work across the quieter weeks.
- November: segment clients using the table above; send the short 2027 figures note.
- December: for clients planning year-end gifts, confirm whether they want to use their 2026 $19,000 exclusion before December 31.
- January: request 2026 gift details, bank evidence and any appraisals; open a Form 709 job for each.
- February: get both spouses’ consent where gift-splitting is planned; draft returns.
- March to April 15: review, obtain signatures, file or extend with the income tax return.
If you already run a year-end planning campaign, add one gift question to it rather than a separate mailing; our guide to year-end tax planning letters shows how to keep those messages short.
How Zaquil handles estate and gift tax client work
In practice, the hard part of estate and gift work is not the form; it is getting the gift details, the evidence and two signatures in time. Here is how a firm runs it in Zaquil.
The firm adds a Form 709 job template with a checklist (gift details, bank evidence, appraisal, spousal consent, review, signature) and applies it to each client flagged in November. The job sits on the kanban board with the April 15 deadline attached, so nothing waits until the last week.
The client receives a short questionnaire in the secure portal asking about gifts over $19,000 in 2026: recipient, amount, date and how it was paid. They upload bank statements or appraisals against each request, and an automation sends a reminder if the list is still open after seven days.
When the return is ready, both spouses e-sign in the portal and the firm keeps the signed PDF certificate with the client record. Signed returns and appraisals go into the firm’s Documents hub, so the gift ledger and its evidence stay together for the executor years later. Fees can be invoiced from the same job, and the return can be locked until the invoice is paid if that is your policy.
See how this fits the wider setup for accounting and tax practices, or compare plans, which start with a 14-day free trial and no card.
Frequently asked questions
What is the federal estate tax exemption for 2027?
For people who die in 2027, the basic exclusion amount is $15,480,000 per person, according to IRS Revenue Procedure 2026-35 released on November 5, 2026. That is up from $15,000,000 for 2026. A married couple can shelter up to twice that amount when the surviving spouse keeps the unused exclusion through a portability election.
What is the gift tax annual exclusion for 2027?
The annual exclusion for 2027 is $20,000 per recipient, up from $19,000 in 2026. A person can give up to that amount to any number of people in a year without filing a gift tax return, as long as the gifts are of a present interest. Gifts to a spouse who is not a US citizen have a separate limit of $201,000 for 2027.
Do I have to pay tax if I give more than the annual exclusion?
Usually not. A gift above the annual exclusion requires a Form 709, and the excess reduces your lifetime basic exclusion amount. Gift tax is only payable once your cumulative taxable gifts exceed the exclusion, which is $15,480,000 for 2027. The filing still matters because it records how much exclusion you have used.
When is Form 709 due for gifts made in 2026?
Form 709 for 2026 gifts is due April 15, 2027. If you extend your individual income tax return, that extension generally also extends the time to file the gift tax return. An extension to file does not extend the time to pay any gift tax due. Check the current Form 709 instructions on IRS.gov for details.
What is gift-splitting?
Gift-splitting lets a married couple treat a gift made by one spouse as made half by each. It effectively doubles the annual exclusion for that gift. The election is made on Form 709 and both spouses must consent. It applies to all gifts either spouse made to third parties during that year, so it needs to be discussed with both clients.
Does a married couple both need to file Form 709 when they split gifts?
Often yes. When the split gift is above the annual exclusion for each spouse, each spouse generally files a Form 709. There are limited cases where only one return with the other spouse’s consent is needed. The rules depend on the amounts and types of gifts, so confirm with the Form 709 instructions before deciding.
What is portability of the estate tax exemption?
Portability lets a surviving spouse use the deceased spouse’s unused exclusion, called the DSUE amount, on top of their own. It must be elected by the executor on a timely filed Form 706, even if the estate owes no tax and is below the filing threshold. Without that filing the unused exclusion is lost.
Can a portability election be made late?
In many cases, yes. Revenue Procedure 2022-32 provides a simplified method for estates that were not otherwise required to file a Form 706 to make a portability election up to five years after the date of death. Eligibility depends on the facts, so check the IRS guidance or ask an estate attorney.
Will the 2027 exemption go down in later years?
Under current law the exemption was set at $15,000,000 for 2026 and is indexed for inflation from 2027, which is why it rose to $15,480,000. Future Congresses can change the law, so no figure is guaranteed. Clients with large or growing estates should review their plans with an attorney periodically.
Do states have their own estate taxes?
Some states impose their own estate or inheritance taxes, often with exemptions far below the federal amount and usually without portability. A client who owes nothing federally may still owe state tax. Check the rules of the client’s state of residence and of any state where they own real estate.
What records should a client keep for gifts?
Keep the date, recipient, amount and method of each significant gift, bank evidence of the transfer, any appraisal for non-cash gifts, and copies of every filed Form 709. Those records let a future executor show how much exclusion was used. A tax firm can store them alongside a lifetime gift ledger for each client.
Does paying a grandchild’s college tuition count as a gift?
Tuition paid directly to a qualifying educational institution, and medical expenses paid directly to the provider, are excluded from gift tax and do not use the annual exclusion. The payment must go straight to the school or provider, not to the student. Other costs such as housing or books are treated as ordinary gifts.
How should a tax firm tell clients about the 2027 figures?
Send a short note with the new exemption and annual exclusion, and one question: did you give more than $19,000 to any one person in 2026? Follow up individually with clients who say yes, recently widowed clients and business owners. Long newsletters about estate tax rates rarely get a response.
Run this part of your business in one place
Zaquil puts every email, document, approval, invoice, call and automation for your accounting and tax practices in a single workspace — set up for US practices on day one.
- Client portal with document requests, organisers, e-signatures and online payment
- Jobs with templates, checklists and recurring work; invoices and unbilled time
- One inbox for email, chat, SMS, WhatsApp and calls across every brand