How Married Couples Claim the Second $15M Estate Tax Exemption

What Is Estate Tax Portability and How Does It Help Married Couples?

Portability lets a surviving spouse add the deceased spouse's unused federal estate tax exemption to their own, potentially combining two full exemptions into one. In 2026, that combined figure reaches $30,000,000 for a married couple who properly elects it.

Here's the concept in plain terms: every U.S. citizen or resident gets a lifetime exemption from federal estate and gift tax. For 2025, that amount is $13,990,000 per individual. If the first spouse to die hasn't used all of their exemption through lifetime gifts or their taxable estate, the leftover portion can be transferred to the surviving spouse. The technical name for this leftover is the Deceased Spousal Unused Exclusion, or DSUE.

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, permanently raised the exemption to $15,000,000 per individual starting January 1, 2026, with annual inflation adjustments going forward. There is no scheduled sunset. This means a married couple that plans together and properly elects portability can shield up to $30,000,000 from the 40% federal estate tax.

Portability was introduced by Congress in 2010 and has been available for estates of decedents dying on or after January 1, 2011. Before portability existed, couples had to rely almost exclusively on bypass trusts (also called credit shelter trusts) to use both exemptions. Portability simplified this dramatically, though bypass trusts still serve a purpose in certain situations, as discussed later in the FAQ.

Think of portability as a financial planning tool you arrange together as a couple. When you and your partner discuss estate planning basics, this election is one of the most consequential steps you can take to create alignment around how your combined wealth will eventually transfer to your heirs.

What Is the DSUE Amount and How Is It Calculated?

The DSUE is the portion of the first spouse's federal estate tax exemption that remains unused at death, calculated directly on Form 706. It represents the exact dollar amount the surviving spouse can add to their own exemption.

The formula is straightforward:

DSUE = Deceased spouse's applicable exclusion amount − Lifetime taxable gifts − Taxable estate

Let's walk through a concrete example. Suppose Spouse A dies in 2026 with a $15,000,000 exemption. During their lifetime, Spouse A made $2,000,000 in taxable gifts. Spouse A's taxable estate (after deductions) is $3,000,000. The DSUE calculation looks like this:

• Applicable exclusion amount: $15,000,000
• Minus lifetime taxable gifts: $2,000,000
• Minus taxable estate: $3,000,000
• DSUE transferred to Spouse B: $10,000,000

Spouse B now has their own $15,000,000 exemption plus the $10,000,000 DSUE, for a total exemption of $25,000,000. If Spouse A had made no taxable gifts and left a taxable estate of $0 (perhaps because everything passed to Spouse B via the unlimited marital deduction), the full $15,000,000 would transfer as DSUE, giving Spouse B $30,000,000 in total exemption.

The Inflation Freeze Matters

One detail that catches many families off guard: the DSUE is frozen at the deceased spouse's date of death and never adjusts for inflation. Meanwhile, the surviving spouse's own basic exclusion amount continues to rise with annual indexing. If a spouse died in 2020 with $5,000,000 in unused exclusion, the surviving spouse still carries exactly $5,000,000 in DSUE years later, even though their own exemption may have grown substantially.

This actually works in the surviving spouse's favor from a spending-order perspective. The IRS requires that the DSUE be applied first when the surviving spouse makes taxable gifts. Because the DSUE will never grow, using it before dipping into your own inflation-adjusted exemption preserves the maximum total value over time.

Do You Have to File Form 706 to Claim Portability?

Yes, portability is never automatic. The executor must file a complete and properly prepared Form 706 and affirmatively elect to transfer the DSUE, even when the estate falls well below the filing threshold and owes zero estate tax.

This is the most common and most costly mistake in estate tax portability. Many families reasonably assume that if no tax is owed, no return is required. That assumption is wrong. Without the Form 706 filing, the deceased spouse's unused exemption simply vanishes.

The consequences can be severe. In Estate of Rowland v. Commissioner (T.C. Memo. 2025-76), an incorrectly filed Form 706 cost the decedent's family approximately $1,500,000 in additional estate taxes that could have been avoided with a properly prepared return. The case underscores why professional preparation matters: Form 706 runs over 25 pages before schedules, and the IRS examines portability elections carefully.

The Portability-Only Return

When an estate files Form 706 solely to elect portability (sometimes called a "DSUE-only return" or "portability-only return"), the reporting burden is lighter than a full estate tax return. Under the regulations at § 20.2010-2(a)(7), estates that qualify for the marital or charitable deduction may use good-faith estimates of asset values rather than formal appraisals for certain property. This practical relief reduces the cost and complexity for surviving spouses of estates that are clearly below the filing threshold.

That said, "lighter" does not mean "simple." The return still requires a complete listing of assets, proper deduction elections, and accurate computation of the DSUE. Working with an experienced estate attorney and CPA is the standard approach for these filings.

When Is the Portability Election Deadline for Form 706?

Form 706 is generally due nine months after the decedent's date of death. A six-month extension is available by filing Form 4768 before the original deadline, pushing the total window to 15 months.

For estates that are not otherwise required to file Form 706 (because the gross estate plus adjusted taxable gifts falls below the filing threshold), a simplified late-election procedure exists under Revenue Procedure 2022-32. This procedure allows the executor to file a portability-only Form 706 on or before the fifth anniversary of the decedent's death. No user fee or private letter ruling is required. The IRS has granted numerous late portability elections under this relief, as seen in PLR 202539007 and PLR 202525002.

However, if the estate exceeds the filing threshold and is independently required to file Form 706 under § 6018(a), this five-year relief is not available. In that case, the nine-month deadline (plus any extension) is firm, and missing it means the portability election is lost.

Key Portability Thresholds and Deadlines

How Do Couples Work with Professionals to Elect Portability the Right Way?

Because Form 706 is complex and mistakes can be permanent, couples plan ahead with an estate attorney, CPA, and financial advisor rather than trying to navigate the filing alone. This is not a DIY tax form.

Neptune manages the full end-to-end process for couples and families navigating estate planning, tax decisions, and financial agreements. Neptune pairs clients with experienced attorneys (20+ years of practice), CFPs, and CPAs and shepherds everything from start to finish. When it comes to the portability election, that means coordinating asset inventories, ensuring proper valuation under the regulations, preparing Form 706, and making sure the DSUE is correctly computed and reported.

State-Level Estate Taxes Don't Follow Federal Portability

One area where professional guidance is especially important: state estate taxes. Portability is a federal concept and generally does not extend to the state level. As of 2025, twelve states and the District of Columbia impose their own estate taxes, often with much lower exemption thresholds. For example, Oregon's estate tax exemption is $1,000,000, and Massachusetts sets its threshold at $2,000,000. A couple who believes they're fully covered by federal portability could still face a significant state tax bill. Your attorney should review your state's rules alongside the federal election.

Why File Even If You're Far Below the Threshold?

Even couples whose combined estate is nowhere near $13,990,000 (2025) or $15,000,000 (2026) may benefit from filing. While the OBBBA made the $15,000,000 exemption permanent, a future Congress could reduce it. Families who skip the portability election today could find themselves in taxable territory if the exemption is lowered years from now. Filing Form 706 to preserve the DSUE is a relatively modest investment in long-term clarity.

As Michael C. Cotugno, Esq., Managing Partner of Neptune Legal, puts it: "The real work, the true magic, lies in the ongoing practice of conscious partnership each and every day." Estate planning, including the portability election, is one of the clearest expressions of that partnership. You're not just filing a tax form. You're making a deliberate choice, together, about how your financial life continues for the people you love.

If you're building an estate plan or thinking about a lawyer-led online prenup that addresses asset classification and long-term financial expectations, Neptune can help you coordinate every piece. Couples who plan together, grow together.