The Estate Tax Exemption Didn't Sunset.
Here's What That Means for California Families.
The Tax Cuts and Jobs Act was made permanent by legislation signed by President Trump in 2026. The scheduled January 1, 2026 sunset — which would have dropped the exemption from ~$13.6M to ~$7M per person — did not happen. The higher exemption is now permanent law.
Federal Estate Tax — Current Rules (2026)
| Parameter | Pre-TCJA (before 2018) | TCJA / Current (2026) | Sunset (did NOT happen) |
|---|---|---|---|
| Exemption per person | ~$5.49M | ~$13.6M (indexed) | ~$7M (avoided) |
| Per married couple | ~$10.98M | ~$27.2M with portability | ~$14M (avoided) |
| Federal estate tax rate | 40% | 40% above exemption | 40% (same) |
| California estate tax | None | None | None |
| Annual gift exclusion | $14,000/recipient | $19,000/recipient (2025) | Same |
| Portability | Yes | Yes — must elect on Form 706 | Same |
| Legislation status | Permanent | ✅ Made permanent 2026 | N/A — sunset avoided |
What Does This Mean for Sacramento and Placer County Families?
The honest answer: for most families in Granite Bay, Roseville, Folsom, and Sacramento, federal estate tax was never the main issue — and the TCJA being permanent doesn't change what actually matters most for your family.
Good news for high-net-worth families
Families with estates up to ~$13.6M per person ($27.2M per couple) face zero federal estate tax. The planning pressure that existed before 2026 has been relieved.
What hasn't changed: probate exposure
A $700,000 Granite Bay home still triggers California probate without a trust. Statutory fees on an $800K estate: $38,000+. This is unchanged by the TCJA.
What hasn't changed: Medi-Cal planning
California Medi-Cal asset limits return July 1, 2027. Families with savings above $21,000 who may need long-term care need to plan now. Estate tax is irrelevant here.
What hasn't changed: incapacity planning
Without a durable power of attorney and health care directive, a stroke or accident leads to court-supervised conservatorship — costing $5,000–$8,000+ to establish. Estate tax exemption levels don't affect this.
For Estates Above $13.6M — Strategies That Still Apply
The 40% federal estate tax still applies above the exemption. For high-net-worth families in the Sacramento and Placer County area with estates approaching or exceeding the threshold, these strategies remain relevant.
Spousal Lifetime Access Trust (SLAT)
An irrevocable trust funded with lifetime exemption, with the spouse as a discretionary beneficiary. Removes assets from the taxable estate while preserving indirect access. Best funded while asset values are lower than projected future values.
⚖️ IRC § 2523Irrevocable Life Insurance Trust (ILIT)
Keeps life insurance death benefit outside the taxable estate. Requires an independent trustee and annual Crummey notices to beneficiaries. Particularly valuable for families with large whole or term life policies.
⚖️ IRC § 2042Annual Gift Program
$19,000 per recipient per year (2025), no gift tax return required. A couple can give $38,000/year to each child and grandchild. Over 10–15 years this compounds significantly. Simple to implement — no attorney required for annual exclusion gifts.
⚖️ IRC § 2503(b)Grantor Retained Annuity Trust (GRAT)
Transfer appreciating assets into a GRAT; if they outperform the IRS § 7520 hurdle rate, the excess passes to heirs estate-tax-free. Works best in lower interest rate environments and with high-growth assets.
⚖️ IRC § 2702Portability Election
A surviving spouse can use the deceased spouse's unused exemption — but only if Form 706 is filed within 9 months of death (or 15 months with extension). This is frequently missed. An unfiled portability election is an exemption permanently lost.
⚖️ IRC § 2010(c)Dustin MacFarlane — Certified Specialist
"Most Sacramento families never faced an estate tax problem to begin with — and the TCJA being permanent confirms that. What they do face: a $700,000 home going through 16 months of probate, a parent who needs nursing home care with no Medi-Cal plan, or a stroke victim whose family can't act without a court order. Those are the real problems. Estate tax planning is relevant for maybe 2% of my clients."
Estate Tax Questions — Answered
Did the estate tax exemption sunset in 2026?
No. The TCJA estate tax exemption did not sunset. President Trump signed legislation in 2026 making the higher exemption permanent. The federal estate tax exemption remains approximately $13.6M per person (indexed for inflation), rather than reverting to the pre-TCJA level of ~$7M.
What is the federal estate tax exemption in 2026?
The federal estate tax exemption in 2026 is approximately $13.6M per person, or roughly $27.2M per married couple using portability. The TCJA provisions were made permanent by legislation signed in 2026, eliminating the prior sunset that had been scheduled for January 1, 2026.
Does California have an estate tax in 2026?
No. California does not have a state estate tax. Only the federal estate tax applies to California residents. The federal rate is 40% on assets above the exemption amount.
Does the permanent TCJA exemption mean I don't need estate planning?
No. The vast majority of California families — including most in Granite Bay, Roseville, and Sacramento — face zero federal estate tax exposure even before the TCJA. Estate planning is about probate avoidance, incapacity planning, Medi-Cal protection, and making sure assets transfer the way you intend. None of that changes regardless of the estate tax exemption level.
What estate tax planning strategies still matter in 2026?
For estates approaching or above $13.6M per person: SLATs, GRATs, ILITs, and annual gifting programs still reduce taxable estates and shift appreciation out of the estate. For the vast majority of California families below that threshold: living trusts, Medi-Cal planning, Proposition 19 planning, and incapacity documents are far more pressing than estate tax.
What is the annual gift tax exclusion in 2026?
The annual gift tax exclusion is $19,000 per recipient in 2025 (indexed for inflation — confirm current year amount). Married couples can combine to give $38,000 per recipient per year with no gift tax filing required. This is independent of the lifetime exemption.
Should high-net-worth families in Sacramento still do estate tax planning?
Families with estates above $13.6M per person (or approaching that level with appreciating assets) should still engage in estate tax planning — the exemption is permanent but the 40% tax still applies above it. SLATs and ILITs funded now lock in current values. For most Sacramento and Placer County families, however, probate avoidance and Medi-Cal planning deliver far more immediate financial benefit.
What is portability and does it still apply in 2026?
Yes. Portability — the ability for a surviving spouse to use the deceased spouse's unused exemption — remains in effect. A married couple can effectively shelter ~$27.2M from federal estate tax using both exemptions. However, portability must be elected on a timely-filed estate tax return (Form 706) — even if no tax is owed.
The Real Issues for Most California Families
Probate avoidance, Medi-Cal planning, incapacity protection, and Proposition 19 compliance matter far more than estate tax for 98% of Sacramento and Placer County families. Start there.
Legal References & Primary Sources
The following California statutes and federal provisions govern the information on this page. Citations are provided to primary sources for verification. Laws change — consult a Certified Specialist for advice specific to your situation.
- §California Probate Code § 6110 — Requirements for a valid will — signature and witnesses
- §California Probate Code § 4000 et seq. — Durable power of attorney for finances
- §California Probate Code § 4600 et seq. — Advance health care directive
- §California Revenue & Taxation Code § 63.2 — Proposition 19 — parent-child property tax exclusion
- §California Probate Code § 21610 et seq. — Omitted spouse — rights of spouse omitted from estate plan
Source: California Legislature (leginfo.legislature.ca.gov) · State Bar of California · California DHCS