The 2026 estate tax changes, what to know.

For a couple of years, the estate planning world braced for a big change. The higher federal estate tax exemption created in 2017 was scheduled to expire at the end of 2025, roughly cutting in half and potentially pulling far more families into estate tax territory. Plenty of articles told you to panic.

Then it didn’t happen. Here’s what the 2026 picture actually looks like, and why, for the overwhelming majority of Michigan families, the estate tax was never the real threat in the first place.

The headline, plainly

The feared cut to the federal estate and gift tax exemption did not take effect. Instead of dropping, the exemption was made permanent at a higher level and is indexed to keep rising with inflation. In plain terms: the amount you can pass free of federal estate tax went up and got more stable, not down. For 2026, that exemption sits at roughly $15 million per person, about $30 million for a married couple.

What actually changed

The short version of the journey: a 2017 law roughly doubled the exemption but set it to sunset after 2025. A 2025 law removed that sunset, locked the higher exemption in permanently, and reset it to the figures above with inflation indexing going forward. So the “2026 estate tax change” everyone prepared for turned out to be the opposite of a tax increase for most people.

The Michigan part most people don’t know

Here’s news that surprises a lot of clients: Michigan has no state estate tax and no inheritance tax. Some states levy their own, with much lower thresholds, but Michigan does not. So a Michigan family is only ever dealing with the federal exemption, the multi-million-dollar one above. That alone takes the estate tax off the table for the vast majority of households in this state.

Who actually needs to worry

Federal estate tax is now genuinely a concern only for families whose total estate, everything, real estate, retirement accounts, life insurance, and business interests included, approaches or exceeds those multi-million-dollar thresholds. If that’s you, proactive planning still matters a great deal, and the current high exemption is an opportunity to lock in gifting strategies while it lasts. If it isn’t you, you can let go of the estate tax worry and redirect that energy to the things that will actually affect your family.

What most families should do instead

The taxes and missteps that quietly cost ordinary families money have nothing to do with the estate tax:

• Capital gains and the step-up in basis. When assets pass at death, they generally get a “stepped-up” cost basis, which can erase decades of capital gains tax for your heirs. Giving assets away during life can forfeit that, a far more common and expensive mistake than any estate tax.
• Portability, and the filing nobody does. A surviving spouse can preserve a deceased spouse’s unused federal exemption, but only by filing an estate tax return to make the election. Skip it, and the benefit can be lost.
• Beneficiary designations. Retirement accounts and life insurance pass by designation, not by your will, and outdated ones override everything else. This is where real money goes to the wrong person.
• Income tax on inherited retirement accounts. The rules for how quickly heirs must draw down an inherited IRA have tightened, with real tax consequences worth planning around.

A measured word on a moving target

Tax law moves, and figures get indexed and occasionally rewritten. The numbers in this article are current as of its writing, but the smarter takeaway is the principle: for nearly all Michigan families, estate planning in 2026 is about income taxes, basis, and getting beneficiary designations right, not about a federal estate tax most will never owe. If your estate is large enough that the exemption is genuinely in play, that’s precisely the situation worth a focused conversation.