Charitable Bequests and Estate Tax in 2026: Federal and State Rules

Short answer

Under the One Big Beautiful Bill Act, the federal estate tax exemption is $15 million per person in 2026, indexed for inflation, with a 40% top rate and no scheduled sunset. Charitable bequests remain fully deductible with no cap. Most families won't owe federal estate tax, but 12 states and Washington, D.C. have their own estate taxes, starting as low as $1 million, and five states tax inheritances.

What is the federal estate tax exemption in 2026?

$15,000,000 per person for deaths in 2026. The One Big Beautiful Bill Act made the higher exemption permanent, with inflation adjustments after 2026, and kept the 40% top rate (IRS, 26 U.S.C. §2010). A married couple can generally shelter twice that. The annual gift tax exclusion stays at $19,000 per recipient.

How many estates pay federal estate tax?

Very few. In filing year 2024, 7,195 estate tax returns were filed and 2,663 owed tax, paying $23.3 billion in all (IRS Statistics of Income). Federal estate and gift tax receipts were $29.5 billion in fiscal 2025 and $38.7 billion in fiscal 2026 (U.S. Treasury).

How do charitable bequests reduce estate tax?

An estate can deduct the full value of gifts to qualified charities, with no cap other than the value of what's given (26 U.S.C. §2055). In filing year 2024, 1,733 estates claimed $37.5 billion in charitable deductions (IRS Statistics of Income).

For a taxable estate, every dollar left to charity removes up to 40 cents of federal tax. For the large majority of families, who are under the exemption, the federal deduction doesn't change anything, but state taxes and income taxes on retirement accounts still might.

Which states have estate or inheritance taxes in 2026?

State	Tax	2026 exemption	Top rate
Connecticut	Estate	$15,000,000	12%
District of Columbia	Estate	$4,988,400	16%
Hawaii	Estate	$5,490,000	20%
Illinois	Estate	$4,000,000	16%
Maine	Estate	$7,160,000	12%
Maryland	Estate and inheritance	$5,000,000 (estate)	16% estate, 10% inheritance
Massachusetts	Estate	$2,000,000	16%
Minnesota	Estate	$3,000,000	16%
New York	Estate	$7,350,000	16%
Oregon	Estate	$1,000,000	16%
Rhode Island	Estate	$1,838,056	16%
Vermont	Estate	$5,000,000	16%
Washington	Estate	$3,076,000 (deaths Jan–Jun 2026); $3,000,000 from July 1	35% for Jan–Jun 2026 deaths; 20% from July 1
Kentucky	Inheritance	Varies by heir	16%
Nebraska	Inheritance	Varies by heir	15%
New Jersey	Inheritance	Varies by heir	16%
Pennsylvania	Inheritance	Varies by heir	15%

Source: Tax Foundation, "Estate and Inheritance Taxes by State, 2026" (data as of October 1, 2026), and the Washington Department of Revenue. Iowa repealed its inheritance tax as of 2025. Spouses are generally exempt from inheritance taxes, and charities usually are too.

State death taxes raised $7.5 billion in fiscal 2025 (U.S. Census Bureau via FRED). A $2.5 million estate in Massachusetts or Oregon can owe state tax while owing nothing federally. Charitable bequests generally reduce state estate taxes too.

What else changed for charitable giving in 2026?

The One Big Beautiful Bill Act changed income tax rules for gifts made while you're alive, starting in 2026 (Taft):

Non-itemizers can deduct up to $1,000 ($2,000 for joint filers) of cash gifts to public charities. Gifts to donor-advised funds don't count.
Itemizers can deduct only charitable gifts above 0.5% of their adjusted gross income.
Top-bracket itemizers get a deduction worth at most 35 cents per dollar.
Private foundations still pay a 1.39% excise tax on investment income; a proposed increase didn't make it into the final law.

Qualified charitable distributions from IRAs, for people 70½ and older, are capped at $111,000 per person in 2026 (Congressional Research Service).

Should you leave money to charity if you won't owe estate tax?

Taxes are rarely the main reason to give, but they still shape the smartest way to do it:

Retirement accounts. Heirs pay income tax on inherited traditional IRAs and 401(k)s; a charity doesn't. See why your IRA may be the best thing to leave to charity.
State estate taxes. In the 12 states and D.C. with their own estate tax, a charitable gift can lower the bill.
Your values. A percentage of your estate, a backstop gift or a named fund lets your values outlast you.

Our free builder helps you do all three.

Frequently asked questions

What is the estate tax exemption in 2026?

$15 million per person for deaths in 2026, indexed for inflation in later years. The top federal rate is 40%.

Will the estate tax exemption drop in 2026?

No. Before 2025 the exemption was scheduled to fall by about half in 2026. The One Big Beautiful Bill Act instead set it at $15 million and removed the sunset.

Are charitable bequests deductible for estate tax?

Yes, in full, with no percentage limit, as long as the recipient is a qualified charity.

Which states have the lowest estate tax thresholds?

Oregon ($1 million), Rhode Island ($1.84 million) and Massachusetts ($2 million) in 2026.

Do I get an income tax deduction for a gift in my will?

No. Bequests reduce estate tax, not your income tax while you're alive. Lifetime gifts and qualified charitable distributions from an IRA are the income tax tools.

Sources

This article is general information, not legal, tax or financial advice. Laws vary by state and change over time. Talk with a licensed professional about your situation. First published October 24, 2026.