2027 Estate Tax Exclusion $15,480,000, Annual Gift $20,000, Noncitizen Spouse $201,000 (Rev. Proc. 2026-35)

The 2027 figures next to 2026

All 2027 figures below are from Rev. Proc. 2026-35; all 2026 figures are from Rev. Proc. 2025-32. The estate and gift items are calendar-year items, so they apply to deaths and gifts in 2027, not to the tax years beginning in 2027 (section 4.02 lists sections 3.43 to 3.46 among the calendar-year items). Our 2026 pages cover the 2026 rules in full: the 2026 estate tax exemption, the 2026 annual gift tax exclusion and gifts to a noncitizen spouse in 2026. This page is the 2027 reference.

What the 2025 law fixed and what the IRS supplied

The premise that the exclusion is $15,000,000 for 2026 and indexed from 2027 is correct. 26 U.S.C. 2010(c)(3)(A) now reads: “For purposes of this subsection, the basic exclusion amount is $15,000,000.” Subparagraph (B) adds that “in the case of any decedent dying in a calendar year after 2026” the amount is increased by a cost-of-living adjustment with calendar year 2025 as the base year, and rounded to the nearest multiple of $10,000. Rev. Proc. 2025-32 (section 2.14) had said only that the amount “will be adjusted for inflation for calendar year 2027 and future years.” Rev. Proc. 2026-35 section 3.44 is the first document with the number: $15,480,000.

The annual exclusion works differently. The statute starts at $10,000 and indexes it with a base year of 1997, rounded down to a multiple of $1,000 (26 U.S.C. 2503(b)(2)), which is why $19,000 became $20,000 in a single step. For a spouse who is not a US citizen, the Code denies the marital deduction and substitutes $100,000 for $10,000 in section 2503(b) (26 U.S.C. 2523(i)), and the Rev. Proc. publishes the indexed result, $201,000. Our 2026 page on gifts to a noncitizen spouse explains why a gift above that line is a taxable gift and what a QDOT does at death.

December 2026 or January 2027: where the timing matters

Two different counters are involved, and they behave differently around December 31, 2026.

The annual exclusion is per calendar year and does not carry over. Section 2503(b)(1) excludes the first part of gifts “made to any person by the donor during the calendar year.” A gift made in December 2026 uses the $19,000; the same gift made in January 2027 uses the $20,000. A donor who gives in both months gets two exclusions. Gifts must be of present interests; the Rev. Proc. repeats “other than gifts of future interests in property.” Splitting a gift with a spouse needs both spouses to be US citizens or residents and to consent (26 U.S.C. 2513(a)); our Form 709 page for illiquid real estate interests covers when a return is due and how LLC interests are valued.

The lifetime exclusion is one cumulative pool. The gift tax credit for each year equals the credit that would apply “if the donor died as of the end of the calendar year,” reduced by credits used in earlier periods (26 U.S.C. 2505(a)). In our reading, a donor who used exactly $15,000,000 by December 31, 2026 can give $480,000 more in 2027 without tax, because the 2027 credit is based on $15,480,000. Whether a taxable gift is made in December or January does not change the pool; what changes is the number it is measured against at the end of each year. The regulation on a lower exclusion at death than at the gift (26 CFR 20.2010-1(c)) deals with a decline in the amount between the gift and the death; the 2027 change is an increase.

A taxable gift above the annual exclusion does not mean tax is payable. It means the excess is reported and used against the lifetime exclusion. These examples ignore state gift taxes, gifts of appreciated property that carry over the donor’s basis, and the cost of a smaller estate at death; they show only what the two years’ numbers allow.

What a death in 2026 versus 2027 changes. For an estate of $20,000,000 with no prior taxable gifts, no deceased spousal unused exclusion and no deductions (our arithmetic), the federal estate tax is (20,000,000 - 15,000,000) x 40% = $2,000,000 for a 2026 death and (20,000,000 - 15,480,000) x 40% = $1,808,000 for a 2027 death, a difference of $192,000. The 40% is the top rate of the unified schedule (26 U.S.C. 2001(c)). Two spouses each have their own amount: $30,960,000 together for 2027 before the portability rules in our credit shelter and portability page and the SLAT page.

Real-estate-heavy estates: the section 2032A cap and the section 6166 2% portion

Two figures in Rev. Proc. 2026-35 matter to families whose wealth is a farm, a ranch or an operating property business.

Special-use valuation (section 2032A). For an estate of a decedent dying in 2027, an executor who elects special-use valuation cannot reduce the value of qualified real property by more than $1,500,000 in total (section 3.45). The statute’s base is $750,000, indexed (26 U.S.C. 2032A(a)(2)). In our example, property with a market value of $6,000,000 and a special-use value of $4,000,000 has a $2,000,000 difference; the cap limits the reduction to $1,500,000, so the estate uses $4,500,000 (our arithmetic; $4,540,000 under the 2026 cap of $1,460,000). If the estate is over the exclusion amount, the extra $40,000 of reduction is worth $16,000 at 40%. The qualification tests for 2032A are in our section 6166 and 2032A page.

Deferral of estate tax (section 6166). If a closely held business interest is more than 35% of the adjusted gross estate, the executor may elect to pay in up to 10 equal installments (26 U.S.C. 6166(a)(1)). Interest on the “2-percent portion” is 2%, and interest on the rest is “45 percent of the annual rate” of underpayment interest (26 U.S.C. 6601(j)(1)). The Code defines the portion as the tentative tax on $1,000,000 (indexed) plus the applicable exclusion amount, less the credit. Rev. Proc. 2026-35 section 3.56 puts the indexed $1,000,000 at $2,010,000 for 2027 deaths.

The 2% portion is the lesser of that amount and the tax actually deferred, so a small estate gets a smaller benefit. The point for a real-estate family is that the amount rises by $28,000 of tax (from $776,000 to $804,000) from 2026 to 2027 and that the whole mechanism begins only above the exclusion amount. A taxable estate that stays under $15,480,000 has no estate tax to defer. Our section 6166 page covers the tests and the Rev. Rul. 2006-34 holdings on rental real estate.

Other 2027 figures in the same document that touch family property

• Seller-financed sales (section 1274A). A qualified debt instrument has stated principal not above $7,704,600 and a cash method instrument not above $5,503,300 for 2027 (section 3.43). The mechanics of selling on installments are in our installment sale page.
• Gifts from abroad (section 6039F). The reporting threshold for gifts received from certain foreign persons is $21,240.31 for taxable years beginning in 2027 (section 3.51), against $20,573 in 2026.
• Gifts from a covered expatriate (section 2801). The tax applies to receipts of covered gifts and bequests above $20,000 in 2027 (section 3.46(3)).
• GST and dynasty trusts. The exemption is $15,480,000 per transferor in 2027 and, as under the 2026 rules, it is not portable to a spouse (26 U.S.C. 2631(c) equates it to the basic exclusion amount). See our dynasty trust and GST page.

State estate taxes are separate

Rev. Proc. 2026-35 changes only the federal figures. A state that taxes estates or inheritances sets its own exclusion, its own rates and its own rules on portability and gifts, and most of those figures do not move with the federal number. We have not re-read any state figure for 2027 here. The list of states and their 2026 exclusions is in our state estate and inheritance tax list, and the longer pages cover New York, Connecticut, Illinois, Massachusetts, Minnesota, Oregon and Washington.

What a reader can do with this

What the documents let you check before talking to anyone:

• Count the exemption you actually have in 2027. Start from $15,480,000, subtract every taxable gift you have reported on Form 709 (the Form 709 running total is the record), and add a deceased spouse’s unused exclusion only if the first estate elected portability.
• Decide which year each gift belongs to. A gift counts in the calendar year it is made. If you plan annual-exclusion gifts to children, grandchildren or trusts, the document shows what each year allows: $19,000 per recipient in 2026, $20,000 in 2027.
• Check the noncitizen spouse line. If a spouse is not a US citizen, a gift of a rental interest above $194,000 in 2026 or $201,000 in 2027 is a taxable gift, because the marital deduction is not available (26 U.S.C. 2523(i)).
• Test a real-estate estate against the three numbers. Write down the value of the real property at market and at special-use value, the share of the adjusted gross estate that is a closely held business, and the tax that would be due above $15,480,000, then compare with the $1,500,000 cap and the $804,000 2%-interest figure.
• Keep state tax on its own line. A federal estate under $15,480,000 can still owe state tax in a state whose exclusion is far lower.

The decision, and who makes it. Whether to give in December or January, whether to use a spousal trust or an irrevocable trust, and whether to elect section 2032A or section 6166 are choices for an estate-planning attorney and a CPA who prepares the Form 709 or Form 706. A financial adviser can model the liquidity needed to pay an estate tax bill. Nothing here is a recommendation to give or not to give.

This is analysis of public documents, not investment, legal or tax advice.

FAQ

Sources, read and saved on November 6, 2026: Internal Revenue Service, Rev. Proc. 2026-35 (sections 3.43, 3.44, 3.45, 3.46, 3.51, 3.56 and 4) and news release IR-2026-133 of November 5, 2026; Rev. Proc. 2025-32 (sections 2.14, 4.40, 4.41, 4.42, 4.47 and 4.51); 26 U.S.C. 2001, 2010, 2032A, 2503, 2505, 2513, 2523, 2631, 6166 and 6601 (Legal Information Institute text); 26 CFR 20.2010-1. Worked examples are our arithmetic. This is analysis of public documents, not investment, legal or tax advice.