Is 2026 exemption really $15M?

Yes \u2014 OBBB extended permanently. NOT $7M sunset that pre-OBBB speculation predicted.

How long to file Form 706 for portability?

9 months from death, +6 month extension. Late portability via Rev Proc 2017-34: 5-year window.

DSUE applies to GST tax too?

No \u2014 GST exclusion is NOT portable. Bypass trust needed to capture GST.

Federal exemption changes affect state?

State exemptions vary widely. CT, MA, NY, OR, WA have lower state exemptions ($1M-$13M).

Can DSUE be used for gifts?

Yes \u2014 DSUE can offset lifetime taxable gifts by the survivor.

Estate Tax Portability DSUE 2026

Estate exclusion 2026: $15M individual (OBBB extended). Portability allows surviving spouse to inherit unused 'DSUE' from first spouse. File Form 706 within 5 years.

First Spouse Estate Value ($)

Second Spouse Estate Value ($)

Second Spouse Growth Years

Annual Growth %

DSUE Inherited

—

Total Shield

—

Estate Tax

—

First spouse estate	—
2026 individual exemption	—
DSUE (unused → spouse)	—
Second spouse current	—
Second spouse future value	—
Total exclusion with portability	—
Taxable estate	—
Estate tax (40%)	—
Tax without portability	—
Savings from portability	—

Estate tax portability lets a surviving spouse inherit the unused estate tax exclusion (Deceased Spousal Unused Exclusion, DSUE) from the first spouse to die. For 2026, the individual exemption is $15M (OBBB extended, did NOT halve to $7M as TCJA-sunset speculation feared).

OBBB Confusion: Exemption Did NOT Halve

The One Big Beautiful Bill Act (P.L. 119-21, July 2025) made the TCJA estate exemption permanent at $15M (2026), inflation-adjusted. Pre-OBBB, the exemption would have reverted to ~$7M January 2026. This is one of OBBB's most consequential changes.

How Portability Works

When first spouse dies, surviving spouse can elect to inherit unused exclusion ('DSUE'). Example: spouse 1 dies with $5M estate. $10M of exclusion unused. Spouse 2 receives $15M own exclusion + $10M DSUE = $25M total shield. Election must be made on Form 706 within 5 years.

Form 706 Filing Requirement

Portability requires filing Form 706 (estate tax return) for the first spouse, even if no estate tax is owed. Otherwise, the unused exclusion is permanently lost. This is the #1 estate planning mistake — heirs assume 'no tax owed' = no filing needed.

Bypass Trust vs Portability

Traditional alternative: Credit Shelter Trust (Bypass Trust) at first death captures exclusion. Portability is simpler but doesn't shelter post-death growth. For estates with high growth assets (concentrated stock, growing business), bypass trust often better.

Last updated May 2026. Sources: IRS Estate Tax, Form 706 Instructions.