Estate tax portability is the federal rule that lets a surviving spouse add a deceased spouse’s unused estate and gift tax exemption to their own, but only if the executor affirmatively elects it by filing IRS Form 706. It is not automatic, and the amount carried over is called the Deceased Spousal Unused Exclusion (DSUE) amount.
Portability lets a surviving spouse use a late spouse’s unused federal exemption. For decedents dying in 2026, the basic exclusion amount is $15,000,000 per person (Source: IRS the One Big Beautiful Bill Act (2025); IRS Rev. Proc. 2025-32), so a couple can potentially shelter up to $30,000,000 combined. Claiming DSUE requires a timely Form 706 election; it is not automatic (Source: 26 U.S.C. sec. 2010(c)(5)(A)).
What estate tax portability is
Estate tax portability is a provision of federal law that allows the executor of a deceased spouse’s estate to transfer that spouse’s unused estate and gift tax exemption to the surviving spouse. The transferred figure is called the Deceased Spousal Unused Exclusion, or DSUE, amount (Source: 26 U.S.C. sec. 2010(c)(4)).
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Under the statute, a surviving spouse’s “applicable exclusion amount” equals the basic exclusion amount plus the DSUE amount received from the last deceased spouse (Source: 26 U.S.C. sec. 2010(c)(2)). This stacking is the mechanism that can effectively double the amount a married couple shields from federal estate tax.
Portability is a federal concept only. It has no effect on state estate taxes, a limitation covered in its own section below. For the broader picture of the federal exemption itself, see the Q3 Advisors explainer on the 2026 estate tax exemption.
What the DSUE amount is
The DSUE amount is the portion of a deceased spouse’s federal exemption that was not used at their death and is passed to the surviving spouse. By statute it is the lesser of (A) the basic exclusion amount, or (B) the last deceased spouse’s applicable exclusion amount minus the amount on which tentative tax was determined on that spouse’s estate (Source: 26 U.S.C. sec. 2010(c)(4)).
In plain terms, if a spouse dies in 2026 having used none of their $15,000,000 exemption, and the executor elects portability, up to $15,000,000 of DSUE may pass to the survivor (Source: IRS the One Big Beautiful Bill Act (2025); IRS Rev. Proc. 2025-32). Added to the survivor’s own $15,000,000, the combined shield can reach $30,000,000.
The DSUE that transfers reflects the exemption actually left unused. Amounts consumed by lifetime taxable gifts or by bequests to non-spouse heirs reduce what remains to port.
How portability works between spouses
Portability works by letting the first-to-die spouse’s leftover exemption follow the surviving spouse until the survivor’s own death or later gifts. The executor computes the DSUE on the first spouse’s Form 706 and elects to transfer it; the surviving spouse then stacks it on top of their own exclusion (Source: 26 U.S.C. sec. 2010(c)(2) and (c)(5)(A)).
A married couple commonly relies on the unlimited marital deduction to pass assets to the survivor free of federal estate tax at the first death. That deduction, however, can leave the first spouse’s exemption unused. Portability captures that otherwise wasted exemption, provided the election is made.
One structural limit is the last-deceased-spouse rule. A surviving spouse may only use DSUE from their most recent deceased spouse. If the survivor remarries and that second spouse also dies, DSUE from the first marriage can be lost and is replaced by whatever DSUE (if any) the newer estate elects (Source: 26 U.S.C. sec. 2010(c)(4)).
Portability is not automatic: the Form 706 election
Portability is never automatic under federal law. A surviving spouse receives the DSUE amount only if the executor of the deceased spouse’s estate files a federal estate tax return that computes the amount and makes the election on that return (Source: 26 U.S.C. sec. 2010(c)(5)(A)). If no return is filed, the transfer does not occur and the unused exemption is generally forfeited, even when the estate itself owes no tax.
The election is made on IRS Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return. When a complete and timely Form 706 is filed for an estate with a surviving spouse, portability is the default result; no separate affirmative step is required beyond filing (Source: IRS Instructions for Form 706, 09/2025, Part 6). An estate that does not want to port can opt out by checking the box in Part 6, Section A of Form 706 (Source: IRS Instructions for Form 706, 09/2025).
A frequent and consequential omission is simply not filing. Because many surviving spouses’ estates fall below the filing threshold, executors sometimes assume no return is needed, and the exemption is then lost.
Filing when the estate owes no tax and is below the threshold
An estate can, and often must, file Form 706 to elect portability even when it is below the filing threshold and owes zero estate tax. For 2025 decedents, Form 706 is otherwise required only if the gross estate plus adjusted taxable gifts and specific exemption exceeds $13,990,000, but the return is also permitted whenever the executor elects to transfer DSUE, regardless of estate size (Source: IRS Instructions for Form 706, 09/2025).
A below-threshold estate that skips Form 706 keeps its current estate tax at zero, but it generally loses the deceased spouse’s exemption for the survivor’s future use. The zero-tax result at the first death and the loss of the exemption are separate outcomes.
Deadlines to elect portability
The standard deadline to file Form 706, including for a portability election, is nine months from the date of death. An automatic six-month extension is available by filing IRS Form 4768 on or before the original due date, giving roughly fifteen months total (Source: IRS Instructions for Form 706, 09/2025). DSUE transfers only if the return is filed within these timely windows.
For estates not otherwise required to file, a longer, simplified window exists. Under Revenue Procedure 2022-32, an estate filing solely to elect portability may file Form 706 on or before the fifth anniversary of the decedent’s death (Source: IRS Rev. Proc. 2022-32; IRS Instructions for Form 706, 09/2025). This extended relief is automatic, carries no user fee, and replaced the earlier two-year window.
The return must carry a specific notation at the top: “Filed Pursuant to Rev. Proc. 2022-32 to Elect Portability under section 2010(c)(5)(A)” (Source: IRS Rev. Proc. 2022-32).
| Situation | Deadline from date of death | Mechanism |
|---|---|---|
| Standard Form 706 filing | 9 months | File Form 706 |
| With automatic extension | ~15 months | File Form 4768 by original due date |
| Estate below filing threshold (portability-only) | 5 years | Rev. Proc. 2022-32, automatic, no user fee |
The 2026 rules: OBBBA made the higher exemption permanent
The 2026 federal basic exclusion amount is $15,000,000 per person, set by the One Big Beautiful Bill Act (OBBBA), Public Law 119-21, signed July 4, 2025 (Source: IRS Rev. Proc. 2025-32, sec. 1 and sec. 4.14). Many older articles still warn that the exemption would fall by roughly half at the end of 2025; OBBBA canceled that scheduled sunset and set the higher amount going forward, with annual inflation indexing beginning in 2027 (Source: IRS the One Big Beautiful Bill Act (2025); IRS Rev. Proc. 2025-32).
For 2025 decedents, the basic exclusion amount is $13,990,000 (Source: IRS Instructions for Form 706, 09/2025). The top federal estate and gift tax rate remains 40% on amounts over $1,000,000 under the unified rate schedule (Source: IRS Instructions for Form 706, 09/2025).
Combining two 2026 exemptions through portability can shelter up to $30,000,000 for a married couple. The chart below shows the per-person and combined figures across the transition.
| Item | 2025 | 2026 |
|---|---|---|
| Basic exclusion per person | $13,990,000 | $15,000,000 |
| Potential combined (couple, with portability) | $27,980,000 | $30,000,000 |
| Top estate/gift tax rate | 40% | 40% |
| Annual gift tax exclusion | $19,000 | $19,000 |
| GST exemption (not portable) | $13,990,000 | $15,000,000 |
The GST exemption is not portable
The generation-skipping transfer (GST) tax exemption is not portable to a surviving spouse. Portability under Section 2010(c) is defined only in terms of the estate and gift basic exclusion amount, while the GST exemption sits separately under Section 2631(c); nothing in the DSUE rules carries the GST exemption over (Source: 26 U.S.C. sec. 2010(c); 26 U.S.C. sec. 2631; Congressional Research Service report IF13053).
For 2026 the GST exemption equals the basic exclusion amount, $15,000,000, but each spouse’s GST exemption is used or lost at their own death (Source: IRS the One Big Beautiful Bill Act (2025); IRS Rev. Proc. 2025-32). Planning for multi-generational transfers therefore often uses tools such as a reverse-QTIP election under Section 2652(a)(3) rather than portability (Source: Congressional Research Service report IF13053).
Portability versus a bypass (credit shelter) trust
Portability and a bypass trust, also called a credit shelter trust, are two ways to preserve a first-deceased spouse’s exemption, and each has tradeoffs. Portability is simpler and preserves a full step-up in basis at both deaths, while a bypass trust removes future appreciation from the survivor’s taxable estate and can add creditor and remarriage protection.
| Factor | Portability (DSUE) | Bypass / credit shelter trust |
|---|---|---|
| How exemption is preserved | DSUE ported via Form 706 election | Assets funded into an irrevocable trust at first death |
| Future appreciation | Grows in survivor’s taxable estate | Generally excluded from survivor’s estate |
| Basis step-up at second death | Generally available on survivor’s assets | Generally not on trust assets |
| State estate tax | Usually no help (few states allow portability) | Can shelter at state level |
| Creditor / remarriage protection | Limited | Often stronger |
| GST planning | GST exemption not portable | Can be structured for GST |
Which approach fits depends on circumstances such as expected asset growth, state of residence, blended-family dynamics, and creditor exposure. With a permanent combined shield of $30,000,000 for 2026 (Source: IRS the One Big Beautiful Bill Act (2025); IRS Rev. Proc. 2025-32), some families may weigh a portability election chiefly for the second basis step-up and appreciation cushion rather than for federal tax exposure alone.
Portability does not apply to state estate taxes
Portability is a federal rule and generally does not extend to state estate taxes. A group of states plus the District of Columbia impose their own estate tax, and most of those do not offer a state-level portability election, so a first-deceased spouse’s state exemption can be lost without separate planning. State estate tax rules and exemption amounts vary and change over time.
Among the states with an estate tax, Hawaii and Maryland are documented as providing a form of state-level portability of a deceased spouse’s exemption (Source: Hawaii Instructions for Form M-6, Hawaii Estate and Generation-Skipping Transfer Tax Return; Maryland Code, Tax-General sec. 7-309). For residents of estate-tax states that do not offer portability, a bypass trust can be a factor to weigh with a qualified professional, because each spouse’s state exemption is generally used or lost at that spouse’s death. Because state law changes, the current-year rules for the relevant state govern. Related state and federal interactions are discussed in the Q3 Advisors piece on the net investment income tax for 2026.
Worked example: two spouses’ estates
This illustration walks through how a portability election can preserve a first-deceased spouse’s federal exemption for the survivor, using 2026 figures. It assumes both spouses are U.S. citizens, that all figures are hypothetical, and that the executor files a timely Form 706 at the first death. The numbers are illustrative only and are not a projection of any particular result.
- Spouse A dies in 2026 with a $6,000,000 estate, leaving everything to Spouse B under the unlimited marital deduction. No estate tax is due, and Spouse A’s $15,000,000 exemption is entirely unused (Source: IRS the One Big Beautiful Bill Act (2025); IRS Rev. Proc. 2025-32).
- Spouse A’s executor files Form 706 within nine months (or under Rev. Proc. 2022-32’s five-year window, since the estate is below the filing threshold) and elects portability. A DSUE of $15,000,000 transfers to Spouse B.
- Spouse B now has an applicable exclusion of $30,000,000: their own $15,000,000 plus the $15,000,000 DSUE (Source: 26 U.S.C. sec. 2010(c)(2)).
- Spouse B later dies with a combined estate of $28,000,000. Because that is below the $30,000,000 applicable exclusion, no federal estate tax is due.
Had the executor not filed Form 706 at Spouse A’s death, Spouse B would have only a single $15,000,000 exemption, and $13,000,000 of the estate could have been exposed to the 40% top rate (Source: IRS Instructions for Form 706, 09/2025). The election, made on a return that itself owed no tax, is what preserved the second exemption.
Filing a portability-only Form 706 in practice
A portability-only Form 706 is filed by an estate that is not otherwise required to file and files solely to transfer the DSUE amount. A Treasury regulation provides a special reporting rule for such estates: for certain property that qualifies for the marital or charitable deduction, the executor generally need not report an exact appraised value and may instead report a good-faith estimate of the total gross estate, within ranges set by the instructions (Source: Treas. Reg. sec. 20.2010-2(a)(7)(ii); IRS Instructions for Form 706, 09/2025). This special rule does not apply to property whose value affects a nonmarital or noncharitable transfer, which must still be reported at value.
- Confirm the estate is not otherwise required to file, which opens the Rev. Proc. 2022-32 five-year window (Source: IRS Rev. Proc. 2022-32).
- Complete Form 706, compute the DSUE, and do not check the opt-out box in Part 6, Section A (Source: IRS Instructions for Form 706, 09/2025).
- Add the required notation at the top of the return citing Rev. Proc. 2022-32 (Source: IRS Rev. Proc. 2022-32).
- File within the applicable deadline. Retain records supporting reported values.
Estate tax filings interact with the rest of a retirement plan, including account titling and beneficiary strategy. Readers weighing lifetime moves alongside estate planning sometimes review a Roth conversion approach, required minimum distributions for 2026, and the Social Security tax torpedo. These are separate topics; portability itself concerns only the federal transfer tax exemption.
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Q3 Advisors is a registered investment adviser focused on retirement tax planning. This article is educational and is not advice; for guidance on your own circumstances, consult a qualified tax or financial professional.
Frequently asked questions
What is estate tax portability?
Estate tax portability is a federal rule that lets a surviving spouse add a deceased spouse’s unused estate and gift tax exemption, called the DSUE amount, to their own exemption (Source: 26 U.S.C. sec. 2010(c)(2) and (c)(4)). It can effectively double the amount a married couple shields from federal estate tax, but only if the executor elects it on Form 706.
How does portability work between spouses?
The executor of the first spouse to die files Form 706, computes the unused exemption, and elects to transfer it. The surviving spouse then stacks that DSUE on top of their own basic exclusion amount (Source: 26 U.S.C. sec. 2010(c)(2)). Only DSUE from the most recent deceased spouse may be used, under the last-deceased-spouse rule.
What is the deadline to elect portability?
The standard deadline is nine months from the date of death, extendable by six months with Form 4768 for roughly fifteen months total (Source: IRS Instructions for Form 706, 09/2025). Estates below the filing threshold that file only to elect portability may file within five years under Revenue Procedure 2022-32 (Source: IRS Rev. Proc. 2022-32).
Do you have to file Form 706 to elect portability?
Yes. DSUE transfers only if the executor files Form 706 and makes the election; there is no other way to claim it (Source: 26 U.S.C. sec. 2010(c)(5)(A)). When a complete, timely Form 706 is filed for an estate with a surviving spouse, portability is the default unless the estate checks the opt-out box in Part 6, Section A (Source: IRS Instructions for Form 706, 09/2025).
Is portability automatic?
No. Portability requires an affirmative election on a filed Form 706; taking no action forfeits the DSUE (Source: 26 U.S.C. sec. 2010(c)(5)(A)). A common failure is an executor assuming no return is needed because the estate owes no tax, which permanently loses the deceased spouse’s exemption for the survivor.
Can you elect portability if the estate is below the filing threshold?
Yes. An estate may file Form 706 to elect portability even when it is below the filing threshold and owes no tax; the return is permitted whenever the executor elects to transfer DSUE, regardless of size (Source: IRS Instructions for Form 706, 09/2025). Such estates generally qualify for the five-year window under Revenue Procedure 2022-32.
Is the GST tax exemption portable?
No. The generation-skipping transfer tax exemption is not portable to a surviving spouse. Portability under Section 2010(c) applies only to the estate and gift basic exclusion amount, while the GST exemption is a separate amount under Section 2631(c) that each spouse uses or loses at their own death. Multi-generational planning therefore often relies on other tools, such as a reverse-QTIP election, rather than portability (Source: 26 U.S.C. sec. 2010(c) and sec. 2631; Congressional Research Service report IF13053).
Does portability apply to state estate taxes?
Generally no. Portability is a federal rule and does not extend to most state estate taxes. A group of states plus the District of Columbia levy their own estate tax, and most do not offer state-level portability; Hawaii and Maryland are documented exceptions that provide a form of it (Source: Hawaii Instructions for Form M-6; Maryland Code, Tax-General sec. 7-309). State estate tax rules change over time, so the current-year rules for the relevant state govern.
Sources
26 U.S.C. sec. 2010(c) (Deceased Spousal Unused Exclusion), law.cornell.edu/uscode/text/26/2010. 26 U.S.C. sec. 2631 (GST exemption), law.cornell.edu/uscode/text/26/2631. Treas. Reg. sec. 20.2010-2 (portability election and special reporting rule for estates not required to file), ecfr.gov. IRS Instructions for Form 706 (Rev. Sept. 2025), irs.gov/instructions/i706. IRS Rev. Proc. 2022-32 (late portability election relief), irs.gov/pub/irs-drop/rp-22-32.pdf. IRS Rev. Proc. 2025-32 (2026 inflation adjustments, sec. 4.14 estate and GST exemption, sec. 3.41 annual gift exclusion), irs.gov/pub/irs-drop/rp-25-32.pdf. IRS newsroom, “IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill,” irs.gov/newsroom. Congressional Research Service report IF13053 (Generation-Skipping Transfer Tax). One Big Beautiful Bill Act, Public Law 119-21 (July 4, 2025). Hawaii Instructions for Form M-6 (Hawaii Estate and Generation-Skipping Transfer Tax Return), tax.hawaii.gov. Maryland Code, Tax-General sec. 7-309 (Maryland estate tax; spousal portability).
