One lifetime exemption for gifts and estates

Published 2026-10-01 · Last reviewed 2026-10-01

Wealth can move in two lifetimes: as a gift while you are alive, and as an estate when you die. Under the federal rules the two are not taxed on two separate allowances - they draw down one lifetime exemption, so a dollar given away today is a dollar no longer in the estate later. This page prices one gift and one estate from the engine the two calculators run, and shows where the $15,000,000 and the $19,000 lines each sit.

The one exemption that covers both

The "estate" and "gift" taxes share a single basic exclusion of $15,000,000 for 2026, and every dollar of cumulative taxable transfers above it is taxed at 40.0 percent. For an estate of $20,000,000 with $250,000 of debts and administration expenses, the taxable estate is $19,750,000. The $15,000,000 line leaves $4,750,000 exposed, and at 40.0 percent that excess becomes $1,900,000 of federal estate tax. What makes the exemption "lifetime" is that the account is not reset for gifts: taxable gifts you made during life are subtracted, so the number left to protect the estate shrinks.

A gift draws the same account down

The first $19,000 of gifts to any one person in a year is excluded - that line is separate from the lifetime exemption and applies per person, per year. Above it, though, the story returns to the one shared number. On a $1,500,000 gift to one person, the annual exclusion removes $19,000, leaving $1,481,000 taxable this year. Added to $14,000,000 of prior lifetime taxable gifts, cumulative taxable gifts reach $15,481,000 - over the $15,000,000 line, with $0 of exemption left - and the tax this gift adds to what was already on the account is $192,400.

Where these numbers come from

• Every figure follows the same estate- and gift-tax rules. The estate is priced after its deductions and then taxed; the gift is priced after the annual exclusion and then taxed for the year; and the lifetime exemption, the annual exclusion and what remains of the exemption are the published amounts. The Estate and Gift tax calculators run the same calculation on the same inputs.
• The two taxes meet at one exemption. Taxable lifetime gifts are added to what remains for the estate, which is exactly why a gift now is less exposure at death - the same $15,000,000 is not given twice.
• What this calculation leaves out. No state estate or inheritance taxes, no marital or charitable deductions in the worked estate, no gift-splitting, no GST trust planning, no portability - each of those changes the number for a particular family.

What this guide does not cover

It is not a will, a trust or an estate plan, and it does not say how a family should time its giving. It prices the federal arithmetic on two fixed examples: it does not model state death taxes, the marital or charitable deductions, gifting to a non-citizen spouse, generation-skipping transfers, or the portability election that lets a surviving spouse use a deceased spouse's unused exemption. It also does not predict how a court or the IRS will treat a particular transfer. What it shows is the shape of the rule: one lifetime account, one 40 percent rate above it, and an annual gift line that is separate from both.

Work your own estate through the Estate Tax Calculator, or price a specific year of giving in the Gift Tax Calculator.

Estimates only - not financial, legal or tax advice, and not a substitute for a will or an estate plan. It does not predict how a court or the IRS will rule on a particular transfer. Read the full disclaimer.