H.R. 1 set 2027 tax brackets planning on a new path by permanently establishing a $15 million per person estate, gift, and GST tax exemption for 2026. The higher exemption also applies at $30 million per married couple and is indexed for inflation.
That change leaves fewer estates exposed to federal transfer tax. IRS statistics cited in the article show taxable estate returns of 2,584 in 2021, 3,170 in 2022, and 3,690 in 2023, after fewer than 4,000 estates paid estate tax each year before H.R. 1.
H.R. 1 and Sec. 1014
The practical choice now turns on what happens to asset basis. Assets acquired from a decedent generally receive a basis adjustment to fair market value under Sec. 1014, while gifting low-basis assets generally carries the donor's basis to the recipient for gain purposes.
That makes the planning tradeoff sharper for people deciding whether to move property during life or keep it until death. A lifetime gift can remove future appreciation from the taxable estate, but it can also leave the recipient with the donor's lower basis.
Before H and TCJA
The Tax Cuts and Jobs Act, P.L. 115–97, doubled exemptions in 2017 and increased the importance of income tax planning. H.R. 1 pushed that shift further by making the higher exemption permanent for 2026 and indexing the per-person amount for inflation.
For readers weighing a gift against a hold strategy, the comparison now depends on the size of the expected gain and the value of the basis step-up at death. When the asset is likely to rise further in value, keeping it until death can preserve the Sec. 1014 adjustment and reduce the income tax hit later.
GST and estate planning
The higher exemption should leave fewer estates paying federal transfer tax, but state transfer taxes still matter because state exemptions are often smaller. In practice, that means many estate plans will now focus first on basis, growth, and the size of the taxable estate, not just on whether a gift can save transfer tax.
For a taxpayer trying to decide what to do now, the answer is usually to match the asset to the tax result. High-basis assets are better candidates for lifetime gifts, while low-basis assets often belong in the estate so Sec. 1014 can reset value at death.
