H.R. 1 permanently established a $15 million per person estate, gift, and GST tax exemption for 2026 and indexed it for inflation, changing the 2027 IRS standard deduction amount planning conversation for people weighing lifetime gifts against holding assets until death. For married couples, the exemption is $30 million.
That shift matters because fewer than 4,000 estates paid estate tax each year before H.R. 1, with IRS statistics showing taxable returns for 2,584 estates in 2021, 3,170 in 2022, and 3,690 in 2023. A higher exemption that rises with inflation could leave even fewer estates exposed to transfer tax.
H.R. 1 and GST planning
The law, P.L. 119–21, is commonly referred to as OBBBA. Its permanent exemption replaces a planning environment that had centered on whether an estate would be large enough to face tax at all. Under the new regime, the first question is whether a transfer even uses part of the exemption.
For taxpayers near the threshold, the practical result is straightforward: gifts made during life can reduce the taxable estate, while the larger exemption gives more room before transfer tax applies. That gives high-net-worth individuals more flexibility, but it also pushes them to look beyond transfer tax alone.
Sec. 1014 basis tradeoff
Assets acquired from a decedent generally receive a basis adjustment to FMV under Sec. 1014. By contrast, gifting low-basis assets generally carries the donor’s basis to the recipient for gain purposes. The result is a tradeoff between reducing estate tax exposure now and preserving a better income-tax result later.
That is why high-basis assets are often better to gift, while low-basis assets are often better to hold until death. If an asset is likely to pass with a basis step-up, heirs may avoid gain on appreciation that would otherwise be built into the property.
IRS statistics and next steps
State exemptions are often smaller than federal exemptions, so some taxpayers still have to plan around state-level rules even when federal transfer tax drops away. For families using the federal system, the practical next step is to compare the transfer-tax savings from gifting against the basis result that comes with holding assets until death.
The source does not give a 2027 standard deduction figure, but it does show why planning has become more selective: the larger, inflation-indexed exemption makes transfer-tax exposure less common, so basis planning now carries more weight in deciding whether to gift or hold.
