How to Prepare for 2026 Estate-Tax Changes

It’s hard to believe, but 2026 is just around the corner. In 2026, we’re going to see some major changes in how much you’re paying in taxes and the estate tax limit, or how much tax could be applied to the money you leave to others. In this article, we’ll talk about the key changes and some steps you may want to take to protect your wealth.

In the last few years, we’ve enjoyed some of the lowest tax brackets in U.S. history. In fact, tax rates have not been this low in 40 years. However, these tax rates, including income tax rate and estate tax limits, are set to sunset and change in 2026. First, let’s go over what estate tax limit changes could look like.

Tax Rate Changes in 2026

Come 2026, tax rates are expected to revert back to where they were around 2017. On average, you’ll likely see your income tax rate increase by about 2-3%. That means you’ll be giving more back to the government, and if you’re working, consider adjusting your withholding on your paychecks. Similarly, if you receive Social Security or Pension checks, check that you adjust your withholding so that you don’t underpay taxes through the year. Underpaying taxes may result in a large tax bill or penalties at the end of the year. Be aware of these changes and adjust your withholdings accordingly!

Estate Tax Limit Changes in 2026

The other major change will be estate tax limits coming down. Currently, estate tax limits are as high as they’ve ever been at $13.6 million. In 2024, you can leave up to $13.6 million to family, friends, and loved ones without incurring an estate tax. An estate tax would then apply to anything over that limit. Remember, the 40% estate tax is separate from any taxes your beneficiaries may owe on 401(k)s or IRAs you leave them, so there may be an additional tax impact.

As you can imagine, most Americans don’t consider these estate tax limits, since their net worth isn’t near that. However, at REAP Financial, we encourage our clients to consider not just what their net worth is today, but also what it will likely be in a few decades. Assuming you’re invested wisely, you could be doubling your wealth every ten years, so it could add up quickly, and with the estate tax rate decreasing, it may impact you and your loved ones.

In 2026, these estate tax limits will revert back to where they were in 2017. With inflation, we anticipate that the $13.6 million limit will go down to around $7 million per person. That means the estate tax limit will essentially be cut in half. If you have a net worth of $2 or $3 million dollars, your portfolio may reach a value where you’re crossing over those limits, assuming the estate tax limit stays the same. This could increase tax burdens on your heirs, potentially pushing up their tax bracket in what might be their highest earning years. In other words, these 2026 changes could imply a significant tax burden.

Planning Early for the 2026 Changes

At REAP Financial, we encourage you to work with fiduciary advisers who collaborate with qualified estate planning attorneys. Currently, opportunities exist to make changes within your estate, which may allow you to be grandfathered into the higher $13.6 million estate tax limits, despite the impending 2026 changes. This requires advanced planning with professionals, so if your wealth is approaching these new thresholds, now is the time to start those conversations.

As of the writing of this article, we’re still 1.5 years out from these 2026 changes. Estate planning is a process that doesn’t happen overnight. It often involves multiple meetings and steps. Beginning the process early is the best way to avoid feeling overwhelmed at the close of 2025.

If you’d like to learn more, check out this video from the REAP Financial team. Click here to discover what a fiduciary is and how they must work in your best interest.

Estate Planning Assistance in Austin, Texas

With the 2026 tax changes approaching, preparing early for adjustments to your estate plan is essential. At REAP Financial, our team of fiduciary advisers is here to help you navigate upcoming tax changes with confidence. We provide tailored estate planning strategies for high-net-worth individuals and families, focusing on maximizing tax efficiency and preserving wealth for future generations.

Located in Austin, Texas, REAP Financial offers personalized financial guidance to secure your legacy. Contact us today for a complimentary consultation and discover how proactive estate planning can help you protect your wealth in light of these upcoming changes.