Probate & Estate Transitions Guide · Colorado Springs
The 2026 Federal Estate Tax Limit Is $15 Million: What It Means for Colorado
A quiet but real federal change took effect in 2026: the basic estate tax exclusion rose to $15 million per person, and the scheduled sunset that would have cut it roughly in half was removed by federal law. For the great majority of Colorado families, an estate never comes near that number, and Colorado adds no estate tax or inheritance tax of its own. This article explains what actually changed, what it does and does not mean for inherited homes and estates in Colorado Springs, and where careful planning still matters.
Key takeaways
- For 2026 the federal estate and gift tax basic exclusion is $15 million per person, up from $13.99 million in 2025, and the One Big Beautiful Bill Act signed in July 2025 removed the scheduled drop to roughly $7 million.
- Colorado has no state estate tax, no inheritance tax, and no gift tax, so the federal exclusion is the only estate tax line most families will ever see.
- An inherited home still receives a stepped-up basis to its value on the date of death, which usually means little or no capital gain when the family sells.
- The 2026 annual gift tax exclusion is $19,000 per recipient, and the higher federal limit does not reduce the value of careful estate planning, especially for real estate.
What actually changed for 2026
The basic exclusion amount is the size of an estate that can pass to heirs free of federal estate tax. For 2026 it is $15 million per person, up from $13.99 million in 2025. The change comes from the One Big Beautiful Bill Act, signed into law in July 2025, which set the exclusion at $15 million and indexed it for inflation after that.
The law also removed the scheduled sunset from the 2017 federal tax overhaul, which had been set to cut the exclusion roughly in half, to about $7 million, starting in 2026. Without that change, estates above the lower number would have faced tax sooner. With it, the higher limit stays in place and grows with inflation. Estates and gifts above the exclusion are taxed at a top rate of 40%.
Why this matters for Colorado families
Colorado has no state estate tax, no inheritance tax, and no gift tax. Colorado's estate tax was eliminated years ago, so the only estate tax a Colorado family can face is the federal one, and the federal exclusion now sits at $15 million per person.
For a family settling a home in Colorado Springs, the estate tax is almost never the deciding factor. A home, retirement accounts, and personal property rarely approach the federal exclusion, even in a strong market. What matters far more for most estates is how the home is titled, whether probate is needed, and how the home is valued at the date of death.
Stepped-up basis is still the real protection for an inherited home
For an inherited home, the more practical tax rule is stepped-up basis. Under federal law, the home's basis steps up to its fair market value on the date of the decedent's death. If the family sells near that value, there is usually little or no capital gain to report, because the sale price and the stepped-up basis are close.
Keep the paperwork that establishes value at the date of death: an appraisal, a broker opinion, or the estate accounting. That documentation is what protects the tax outcome if the home sells later, and it is the piece most families forget to preserve.
What did not change: planning still counts
A higher federal exclusion is not a reason to skip estate planning. It is a reason many Colorado families can relax about the estate tax line, but the day-to-day rules around ownership and transfer did not change.
Beneficiary deeds still must be signed, notarized, and recorded before death to work. A will or trust still determines who inherits a home when there is no beneficiary deed. Spouses can still use portability to share a combined exclusion, and the 2026 annual gift tax exclusion is $19,000 per recipient, unchanged from 2025, which families can use to move value to heirs without gift tax.
What to do with this information
For most Colorado Springs families the practical work is the same as it was before the change.
- Heirs and executors selling an estate home: focus on the stepped-up basis paperwork and the probate path, not the estate tax, and bring the deed to a probate attorney before listing.
- Families planning ahead: consider using the $19,000 annual gift exclusion per recipient, and keep ownership records current, especially beneficiary deeds.
- Trust and estate documents drafted years ago deserve a review with an attorney, because rules around electronic documents and recording tightened in recent years.
- Remember the numbers can move again, so ask for the current figure rather than relying on this year's limit forever.
Juanita's practical take for the Springs
In two decades of local real estate, the estate tax has almost never been the reason a Colorado Springs family could not sell a home. The reasons are usually practical: whose name is on the deed, whether the estate is in probate, what the house is worth on the date of death, and how the family will divide the proceeds.
Juanita Simkins is a Certified Probate Expert who has guided Colorado Springs families through estate home sales for 22 years, working alongside probate attorneys and trust officers. A short conversation sorts the tax questions from the practical ones and produces a clear sequence. Call 719-749-1601, email realtorjuanita@gmail.com, or book a consultation at calendly.com/realtorjuanita.
Written by Juanita Simkins
Realtor & Advisor, Broker Associate with eXp Realty in Colorado Springs. 22 years guiding local downsizing, estate, and probate transitions, including a Certified Probate Expert designation.
