Yes, you should review and likely update your will before 2026 to align with significant, upcoming changes to federal estate and gift tax exemptions. For 2026, the lifetime exemption is rising, making it a critical time to review, restructure, or optimize your estate plan. Consulting a professional is essential to ensure compliance with new laws.
California has made one noteworthy change in the probate arena. Beginning in 2026: The small estate limit to avoid Probate is $208,850 for non-real estate assets. You can now also avoid Probate if the estate contains real property valued under $750,000 (as of the date of death) and cash accounts under $208,850.
Key Changes for 2026
Lifetime Estate and Gift Tax Exemption: The law sets the federal exemption at $15 million for an individual, or $30 million for a married couple. This is the amount a person can transfer during their lifetime or at death without incurring federal estate or gift tax.
Maximum monthly benefits increase
The Social Security Administration sets a limit for the maximum monthly benefit a worker can receive if they retire at full retirement age. In 2025, the maximum monthly benefit for a worker retiring at full retirement age was $4,018. That limit will increase to $4,152 in 2026.
For 2026, the federal estate and gift tax exemption is set to increase to $15 million per individual, up from $13.99 million in 2025, thanks to the One Big Beautiful Bill Act (OBBBA) signed in 2025, making this higher amount permanent and indexed for inflation. This means a married couple could potentially shield up to $30 million from federal estate and gift taxes, with the top tax rate remaining at 40% for amounts exceeding the exemption.
You can typically inherit a large amount without federal taxes because the tax applies to the deceased's estate, not the recipient, and the exemption is very high: $13.99 million in 2025 and $15 million in 2026 per person, meaning most inheritances fall below this threshold. The key is that the estate's total value must exceed these limits for any tax to be owed by the estate. Inheritances themselves (cash, property) are generally not income, but earnings on them (like interest/dividends) or pre-tax retirement funds (like IRAs) are taxable.
One Big Beautiful Bill Tax Law Changes for your 2026 (and on) tax returns
New tax brackets for 2026
The amount of taxes you will pay depends on how much you make each year. Income under $58,523 will be taxed at 14 per cent. Incomes from $58,523 to $117,045 will be taxed at 20.5 per cent.
Retirement 2026 by the Numbers: As the new year begins, savings have hit unprecedented levels, but rising health care costs and growing poverty make retirement unaffordable for many.
Starting Jan. 1, 2026, the basic exemption amount increases to $15 million per person. Any remaining unused exclusion amount upon a married person's death is portable and transferred to the surviving spouse, effectively sheltering $30 million from federal estate and gift tax for a married couple.
Yes, in 2024, each parent could gift $18,000 to a child (totaling $36,000 per child for the couple) without tax implications, and for 2025, that amount increased to $19,000 per parent ($38,000 per child) because the annual gift tax exclusion is adjusted for inflation, requiring separate checks for each parent to utilize the full amount, according to TurboTax, Yahoo Finance, Guardian Life, IRS (.gov), and Mercer Advisors.
Some of these new tax laws affect 2025 taxes (filed in 2026), but most will start in 2026 or later. TCJA rules that remain include the bigger Standard Deduction, no personal or dependent exemptions, and income tax rates. The bill also adds temporary changes for some people, like limiting taxes on tips or overtime pay.
Under California law, a new will generally revokes any prior wills if it includes a clause stating that the new will is intended to supersede the previous ones. It's essential to explicitly mention this clause to avoid any potential confusion or disputes.
Yes, you can live off the interest/returns from $500,000, but it depends heavily on your lifestyle and expenses, with the common 4% rule suggesting about $20,000 annually, which may require a frugal lifestyle, relocation, or significant Social Security income to supplement. With smart investing (e.g., balanced stock/bond mix) and minimal spending, it's feasible for many, but living in a high-cost area or with high expenses would make it difficult.
You can typically inherit a large amount without federal taxes because the tax applies to the deceased's estate, not the recipient, and the exemption is very high: $13.99 million in 2025 and $15 million in 2026 per person, meaning most inheritances fall below this threshold. The key is that the estate's total value must exceed these limits for any tax to be owed by the estate. Inheritances themselves (cash, property) are generally not income, but earnings on them (like interest/dividends) or pre-tax retirement funds (like IRAs) are taxable.
Once 2026 withholdings go into effect, "folks will see slightly larger paychecks," assuming their income stays the same as 2025, said Andrew Lautz, director of tax policy for the Bipartisan Policy Center.
Cost-of-living adjustment increase
In October, the Social Security Administration announced a 2.8% COLA for 2026, increasing the average payout for retirees by $56 each month, or from $2,015 to $2,071. For Medicare enrollees, however, benefits may not increase much because Medicare's rules changed for 2026.
For 2026, the federal estate and gift tax exemption is set to increase to $15 million per individual, up from $13.99 million in 2025, thanks to the One Big Beautiful Bill Act (OBBBA) signed in 2025, making this higher amount permanent and indexed for inflation. This means a married couple could potentially shield up to $30 million from federal estate and gift taxes, with the top tax rate remaining at 40% for amounts exceeding the exemption.