The One Big Beautiful Bill Act (OBBBA) permanently increased the federal estate and gift tax exemption to a whopping $15 million per person for 2026 and later. The estate tax portability election is now more important than ever for married couples looking to maximize their exemption. You can give away while alive and/or bequeath at death this much money or property free of federal estate and gift tax. Related: Read our article on the hidden benefits of filing a gift tax return.
What Is an Estate Tax Portability Election?
If you’re married, you and your spouse each get a $15 million exemption. Thus, your combined estate and gift tax exemption is $30 million for 2026 (adjusted for inflation each year).
But married couples don’t automatically get the combined exemption of up to $30 million. Rather, when one spouse dies, the executor must file an estate tax return, even if it isn’t otherwise required, and make a “portability election”—that is, they must direct the IRS to “port” (transfer) the deceased spouse’s unused exemption to the living spouse.
How Executors Can Lose the Estate Tax Portability Election
A recent Tax Court case shows that making a portability election creates significant risk.
To make filing an estate tax return solely to elect portability as simple as possible, the IRS allows the executor to use a simplified reporting procedure and provide a single estimate of the entire estate’s value instead of providing fair market values of all the estate’s assets.
Key point. The executor can use simplified reporting only if the executor leaves the entire estate to the surviving spouse and/or to charity.
The Tax Court addressed this issue in the Estate of Rowland case. The executor improperly used simplified reporting after the deceased spouse left property in trust to grandchildren. As a result, the court disallowed the executor’s portability election, and the surviving spouse lost the deceased spouse’s $3.7 million unused estate tax exemption, resulting in $1.5 million in extra estate tax due when the surviving spouse died.
Estate Tax Portability Election Lessons from the Estate of Rowland
This case is a wake-up call to all married couples and their estate planners. Portability offers the simplest planning strategy to maximize the couple’s combined exclusion amount. But the executor of the deceased spouse’s estate must follow the proper reporting procedures to make a valid portability election.
Executor instructions for a portability election are now especially important after Rowland, to ensure that portability is not lost entirely due to inadequate estate return preparation.
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