What the New $15 Million Federal Estate Tax Exemption Means for Indiana Families in 2026

A federal tax law signed in the summer of 2025 changed the numbers that drive estate tax planning, and the headlines that followed left many Indiana families wondering whether their own plans need attention. The short answer for most Hoosier households is reassuring, though it carries a caution worth understanding. The One Big Beautiful Bill Act set the federal estate tax exemption at $15 million per person starting January 1, 2026, and made that figure permanent rather than letting it drop at the end of 2025 as prior law required. For a married couple, that shelters up to $30 million from federal estate tax. Very few families in Lake County, or anywhere else in Indiana, will ever approach that threshold.

That reality should shift where your attention goes. The real risk for most Indiana families lies elsewhere, in the parts of a plan that decide whether your wishes actually get carried out.

What the $15 Million Federal Estate Tax Exemption Actually Changed

Under the Tax Cuts and Jobs Act of 2017, the exemption had been roughly doubled, sitting at $13.99 million per person in 2025. That increase carried an expiration date. Without congressional action, the exemption was scheduled to fall back to around $5 million per person, adjusted for inflation, on January 1, 2026.

The One Big Beautiful Bill Act, signed July 4, 2025, removed that scheduled drop. It set a $15 million exemption for 2026 and provided for annual inflation adjustments beginning in 2027, using 2025 as the base year. The new figure is written into the Internal Revenue Code as the basic exclusion amount under IRC Section 2010(c)(3)(A). The estate tax rate on amounts above the exemption remains 40 percent.

“Permanent” in this context means there is no built-in sunset. A future Congress could still change the number. For now, families can plan without the pressure of a looming deadline, which is a meaningful change from the uncertainty that hung over 2025.

Indiana Has No Death Tax of Its Own

This is where the Indiana picture matters. Indiana repealed its inheritance tax for anyone who died after December 31, 2012. The repeal was signed into law in 2013 and applied retroactively to the start of that year. Indiana also has no separate state estate tax. The old Indiana estate tax was a pick-up tax tied to a federal credit that disappeared, and no Indiana estate tax has been imposed on deaths since 2004.

What that means in practice is straightforward. When an Indiana resident dies, there is no state-level tax on the transfer of their property, regardless of the size of the estate. Combine that with a $15 million federal exemption, and the overwhelming majority of Indiana estates owe no death tax at any level.

I raise this because a fair number of people still carry a worry that their children or grandchildren will face a tax bill simply for inheriting. For Indiana families under the federal threshold, that worry is misplaced. The energy spent fearing a tax that will not apply is better spent on the parts of a plan that determine whether your wishes are honored.

What Indiana Families Should Focus On Instead

If federal estate tax is off the table for your household, the value of estate planning has not shrunk. It has simply moved to where it always belonged for most families.

Probate avoidance usually comes first. Indiana probate can be time-consuming and public, and assets titled in a single name with no beneficiary designation generally pass through it. A revocable living trust, properly funded, keeps those assets out of probate. Beneficiary designations and transfer-on-death arrangements do the same for specific accounts and real estate when they are coordinated with the rest of the plan.

Incapacity planning is just as important and often overlooked. A durable financial power of attorney and a health care representative appointment let someone you trust act for you if illness or injury takes away your ability to act for yourself. Without those documents, your family may face a guardianship proceeding in court, which is exactly the kind of expense and delay sound planning is meant to prevent.

Then there is the step-up in basis, the tax issue that actually touches ordinary Indiana families. Under IRC Section 1014, most assets receive a new income tax basis equal to their fair market value at the owner’s death. An adult child who inherits appreciated property and sells it soon afterward often owes little or no capital gains tax because of that adjustment. How property is titled, and whether it sits inside certain trusts, can affect that benefit. This is a real planning concern for families who will never see a dollar of estate tax.

Blended families, minor children, beneficiaries with disabilities, and family businesses each add their own considerations. None of those depend on the size of the exemption. They depend on careful drafting that reflects your family’s actual situation. For a closer look at how the foundational tools fit together, my earlier discussion of wills versus trusts under Indiana law covers when each one makes sense.

When the Higher Exemption Still Calls for Planning

A smaller group of Indiana families does need to think about the federal number. If your combined assets, including life insurance, retirement accounts, business interests, and real estate, are approaching or above $15 million as an individual or $30 million as a couple, the planning conversation changes. Lifetime gifting, irrevocable trusts, and valuation strategies become relevant, and the permanence of the new exemption gives you room to act deliberately rather than under deadline pressure.

Owning property in another state can also pull a different state’s death tax into the picture, since some states still impose one even though Indiana does not. Multi-state ownership is worth reviewing on its own terms.

Whether the new exemption is welcome news you can set aside or a reason to revisit a larger plan, the sensible move is to look at your documents in light of where the law now stands. Attorney Burton Padove has spent nearly four decades helping Indiana families build plans that hold up, and a focused review can tell you quickly whether your current plan still does what you intend. Padove Law offers free, in-home consultations across Indiana, and you can reach the office at (219) 836-2200 to talk through your situation and decide on a practical next step.