Federal Estate Tax Exemption 2026: What Kansas Families Need to Know

For the past several years, estate planners and surviving family members in Kansas have had a date circled on their calendars: December 31, 2025. That was when the elevated federal estate tax exemption was scheduled to sunset, reverting from roughly $14 million to approximately $7 million per person. For married couples with combined estates in that range, it created significant uncertainty about estate planning, gifting strategies, and the tax liability their heirs might face.

That uncertainty has been resolved. Here is what changed and what it means for Kansas estates in 2026 and beyond.

What Happened to the Exemption

The Tax Cuts and Jobs Act (TCJA) of 2017 roughly doubled the federal estate tax exemption. The exemption reached $13.99 million per individual in 2025. Without Congressional action, it was set to revert to pre-2018 levels — approximately $7 million, adjusted for inflation — on January 1, 2026.

In July 2025, Congress passed the "One Big Beautiful Bill Act," which permanently established the federal estate tax exemption at $15 million per individual and $30 million per married couple effective 2026. The sunset provision in the TCJA was eliminated. This is now the permanent baseline, though Congress could always revisit it in future legislation.

For 2025 estates (deaths occurring in 2025), the applicable exemption was $13.99 million. For deaths occurring on or after January 1, 2026, the exemption is $15 million.

What This Means for Kansas Families

The practical implication for most Kansas families is straightforward: federal estate tax is not a concern for the overwhelming majority of Kansas estates.

The median Kansas home value is well under $300,000. A typical Kansas middle-class family might have a home, retirement accounts, life insurance, and personal savings totaling $500,000 to $2 million. Even at the upper end of that range, the estate is a small fraction of the $15 million exemption.

Federal estate tax — a 40% rate applied to the taxable portion of an estate — only becomes a real concern for estates exceeding $15 million in 2026. For Kansas families, this is primarily relevant to large agricultural landowners, business owners with substantial enterprise value, and high-net-worth individuals with significant investment portfolios.

Kansas Has No State Estate Tax

This point eliminates another layer of concern: Kansas does not have a state estate or inheritance tax. The Kansas estate tax was repealed effective January 1, 2010. There is no state-level estate tax return to file, no state-level exemption to track, and no separate Kansas estate tax liability.

Some neighboring states do have estate or inheritance taxes. Missouri has no state estate tax. Nebraska has an inheritance tax. Iowa eliminated its inheritance tax in 2025. If you own property in multiple states, the tax treatment may differ — consult with an estate attorney familiar with the relevant states.

What Kansas Estates Still Owe Federally

Even with a $15 million exemption eliminating estate tax for most families, federal tax obligations do not disappear entirely after a death. The following remain relevant:

Income tax on inherited retirement accounts. Traditional IRAs, 401(k)s, and similar pre-tax retirement accounts do not get a step-up in basis when inherited. Beneficiaries who inherit these accounts owe ordinary income tax as they take distributions. Under the SECURE 2.0 Act, most non-spouse beneficiaries must empty the inherited account within 10 years, which can create significant income tax liability if not managed carefully.

Federal estate tax return for large estates. Even if no tax is owed because the estate is below the $15 million threshold, estates above a certain size may still be required to file IRS Form 706 to establish the stepped-up basis on inherited assets and to lock in any unused exemption for a surviving spouse (portability election). An estate attorney or CPA should make this determination for estates in the multi-million dollar range.

Capital gains on inherited assets. Most inherited assets receive a stepped-up basis to fair market value at the date of death. This effectively eliminates capital gains tax on the appreciation that occurred during the deceased's lifetime. However, assets in IRAs and 401(k)s do not receive this step-up. Understanding which assets have stepped-up basis and which do not matters for heirs who plan to sell inherited property.

The Portability Election: A Deadline Families Miss

For married Kansas couples, portability allows the surviving spouse to add the deceased spouse's unused federal estate tax exemption to their own. This can effectively double the couple's total exemption.

To use portability, the executor must file IRS Form 706 for the deceased spouse's estate, even if no estate tax is owed, and make the portability election. The deadline is 9 months after the date of death, with a possible 6-month extension. Missing this deadline forfeits the portability election permanently.

For a couple where the first spouse to die has a $15 million estate with no taxable assets — a common scenario — the surviving spouse could end up with a combined $30 million exemption if the portability election is timely filed. For a couple with a $10 million combined estate, this is likely not necessary. For a couple with a $20 million combined estate, it matters significantly.

If your spouse's estate is in the multi-million dollar range, consult with an estate attorney within the first few months of death specifically about whether a Form 706 portability election makes sense.

What Changed and What Didn't: A Summary

For Most Kansas Families: Focus on These Instead

If your estate is well below $15 million — which covers nearly every Kansas family — the federal estate tax is not where to focus your energy. The more immediate and financially consequential issues are:

• Claiming the Kansas $75,000 family allowance before creditors make claims
• Filing KPERS death benefit paperwork before the election deadline closes
• Electing COBRA or Kansas Mini-COBRA health insurance within 30 days
• Filing for Kansas property tax relief programs (K-40H, K-40SVR) that expire each filing season
• Transferring vehicle titles correctly to avoid permanent odometer discrepancy brands
• Understanding how Medicaid estate recovery may affect the home, even if it transferred via a TOD deed

The Kansas Survivor Benefits Navigator covers all of these state-specific programs in sequenced order — the deadlines, the forms, and the Kansas-specific rules that determine whether you keep the full value of your inheritance or lose portions to administrative errors, creditor claims, or missed filings.

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