26 U.S.C. § 2010 — Unified credit against estate tax

submitted 50 years ago by Pub. L. 94-455 to r/title-26-INTERNAL-REVENUE-CODE · 594 words · no verdicts yet

in plain englishAI-generated · not legal advice

Every estate gets a tax credit that offsets the estate tax owed. This credit is based on a basic exclusion amount of $15,000,000, which rises with inflation after 2026. A surviving spouse can add a deceased spouse's unused exclusion. The total credit can never exceed the estate tax actually owed.

(a) General rule. Every estate gets a tax credit called the "applicable credit amount." This credit is subtracted from the estate tax that section 2001 would otherwise impose.

(b) Adjustment for certain gifts made before 1977. If the decedent made gifts after September 8, 1976, and claimed a specific gift-tax exemption for them under old section 2521, the credit is reduced. The reduction equals 20 percent of that earlier exemption amount.

(c) Applicable credit amount. The credit equals the tentative estate tax that would apply to an estate worth exactly the "applicable exclusion amount." That exclusion amount is the "basic exclusion amount," plus, for a surviving spouse, any unused exclusion inherited from a deceased spouse.

The basic exclusion amount is $15,000,000. For deaths after 2026, this figure rises each year with inflation, based on a cost-of-living formula, and rounds to the nearest $10,000.

A surviving spouse can add a deceased spouse's leftover exclusion. That leftover amount is the smaller of the basic exclusion amount or the unused portion of the deceased spouse's own exclusion.

To use a deceased spouse's leftover exclusion, the deceased spouse's executor must file an estate tax return, calculate the amount, and elect to allow it. This election is irrevocable and only available if that return was filed on time. Even after normal deadlines for auditing that return have passed, the Secretary may still examine it to verify this leftover amount. The Secretary may issue regulations to carry out these rules.

(d) Limitation based on amount of tax. The credit can never exceed the estate tax actually owed under section 2001.

facts

- Location: Title 26 (Internal Revenue Code), § 2010, titled "Unified credit against estate tax." - Length: 594 words, comprising subsections (a) through (d). - Enacted: Added by Pub. L. 94-455, title XX, § 2001(a)(2), on October 4, 1976 (90 Stat. 1848). - Amendments: Amended 9 times, most recently by Pub. L. 119-21, title VII, § 70106(a), July 4, 2025. - Basic exclusion amount: Set at $15,000,000 under subsection (c)(3)(A), with inflation adjustments for decedents dying after 2026.

the actual law source: uscode.house.gov ↗public domain

(a) General rule

A credit of the applicable credit amount shall be allowed to the estate of every decedent against the tax imposed by section 2001.

(b) Adjustment to credit for certain gifts made before 1977

The amount of the credit allowable under subsection (a) shall be reduced by an amount equal to 20 percent of the aggregate amount allowed as a specific exemption under section 2521 (as in effect before its repeal by the Tax Reform Act of 1976) with respect to gifts made by the decedent after September 8, 1976.

(1) In general

For purposes of this section, the applicable credit amount is the amount of the tentative tax which would be determined under section 2001(c) if the amount with respect to which such tentative tax is to be computed were equal to the applicable exclusion amount.

(2) Applicable exclusion amount

For purposes of this subsection, the applicable exclusion amount is the sum of—

(A)

the basic exclusion amount, and

(B)

in the case of a surviving spouse, the deceased spousal unused exclusion amount.

(3) Basic exclusion amount

(A) In general

For purposes of this subsection, the basic exclusion amount is $15,000,000.

(B) Inflation adjustment

In the case of any decedent dying in a calendar year after 2026, the dollar amount in subparagraph (A) shall be increased by an amount equal to—

(i)

such dollar amount, multiplied by

(ii)

the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting “calendar year 2025” for “calendar year 2016” in subparagraph (A)(ii) thereof.

If any amount as adjusted under the preceding sentence is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.

(4) Deceased spousal unused exclusion amount

For purposes of this subsection, with respect to a surviving spouse of a deceased spouse dying after December 31, 2010, the term “deceased spousal unused exclusion amount” means the lesser of—

(A)

the basic exclusion amount, or

(B)

the excess of—

(i)

the applicable exclusion amount of the last such deceased spouse of such surviving spouse, over

(ii)

the amount with respect to which the tentative tax is determined under section 2001(b)(1) on the estate of such deceased spouse.

(5) Special rules

(A) Election required

A deceased spousal unused exclusion amount may not be taken into account by a surviving spouse under paragraph (2) unless the executor of the estate of the deceased spouse files an estate tax return on which such amount is computed and makes an election on such return that such amount may be so taken into account. Such election, once made, shall be irrevocable. No election may be made under this subparagraph if such return is filed after the time prescribed by law (including extensions) for filing such return.

(B) Examination of prior returns after expiration of period of limitations with respect to deceased spousal unused exclusion amount

Notwithstanding any period of limitation in section 6501, after the time has expired under section 6501 within which a tax may be assessed under chapter 11 or 12 with respect to a deceased spousal unused exclusion amount, the Secretary may examine a return of the deceased spouse to make determinations with respect to such amount for purposes of carrying out this subsection.

(6) Regulations

The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out this subsection.

(d) Limitation based on amount of tax

The amount of the credit allowed by subsection (a) shall not exceed the amount of the tax imposed by section 2001.

Source credit: (Added Pub. L. 94–455, title XX, § 2001(a)(2), Oct. 4, 1976, 90 Stat. 1848; amended Pub. L. 97–34, title IV, § 401(a)(1), (2)(A), Aug. 13, 1981, 95 Stat. 299; Pub. L. 101–508, title XI, § 11801(a)(39), (c)(19)(A), Nov. 5, 1990, 104 Stat. 1388–521, 1388–528; Pub. L. 105–34, title V, § 501(a)(1)(A), (B), Aug. 5, 1997, 111 Stat. 845; Pub. L. 107–16, title V, § 521(a), June 7, 2001, 115 Stat. 71; Pub. L. 111–312, title III, §§ 302(a)(1), 303(a), Dec. 17, 2010, 124 Stat. 3301, 3302; Pub. L. 112–240, title I, § 101(c)(2), Jan. 2, 2013, 126 Stat. 2318; Pub. L. 115–97, title I, §§ 11002(d)(1)(CC), 11061(a), Dec. 22, 2017, 131 Stat. 2060, 2091; Pub. L. 119–21, title VII, § 70106(a), July 4, 2025, 139 Stat. 162.)

history & why it existsrecord from the source credit

1976Enacted · Pub. L. 94-455 · 90 Stat. 1848
1981Amended · Pub. L. 97-34 · 95 Stat. 299
1990Amended · Pub. L. 101-508 · 104 Stat. 1388
1997Amended · Pub. L. 105-34 · 111 Stat. 845
2001Amended · Pub. L. 107-16 · 115 Stat. 71
2010Amended · Pub. L. 111-312 · 124 Stat. 3301, 3302
2013Amended · Pub. L. 112-240 · 126 Stat. 2318
2017Amended · Pub. L. 115-97 · 131 Stat. 2060, 2091
2025Amended · Pub. L. 119-21 · 139 Stat. 162

The record indicates that this section was added by Public Law 94–455, title XX, § 2001(a)(2), enacted October 4, 1976, and reported at 90 Stat. 1848. The source credit shows that the section has since been amended nine times, by Public Law 97–34 (1981), Public Law 101–508 (1990), Public Law 105–34 (1997), Public Law 107–16 (2001), Public Law 111–312 (2010), Public Law 112–240 (2013), Public Law 115–97 (2017), and Public Law 119–21 (2025). This pattern of repeated revision over nearly five decades reflects sustained congressional attention to the credit amount and its mechanics. Public Law 94–455 is the Tax Reform Act of 1976, which is generally understood to have substantially restructured federal estate and gift taxation, including the unification of the estate and gift tax systems into a single rate schedule and a single credit. The creation of a unified credit in place of separate exemptions is commonly described as part of that unification effort, intended to simplify the interaction of lifetime gifts and testamentary transfers under one integrated regime. Beyond this general purpose of the 1976 Act, the record does not establish the specific legislative reasoning behind each subsequent amendment, including the various increases to the exclusion amount, the portability provisions for surviving spouses, or the sunset and inflation-adjustment mechanisms reflected in the current text. Those later changes are generally associated with broader debates over estate tax relief and revenue policy in their respective eras, but this note does not speculate further where the source materials do not specify legislative intent.

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