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Why Estate Planning And Taxes Deserve A Look Before December 31
If you own a business in Southeast Idaho, whether that's a contracting company in Idaho Falls, farm ground outside Blackfoot, or a practice in Pocatello, estate planning and taxes probably sit on your to-do list somewhere between "update the buy-sell agreement" and "someday." Here's the good news: 2026 is the friendliest year for estate taxes in a long time. The catch is that friendly rules make it easy to assume you're finished, and a few quiet details can still cost your heirs real money.
Poston Denney & Killpack has helped Idaho Falls business owners with the tax side of estate planning since 1984. The firm's approach hasn't changed in 40+ years: personal service and expertise, applied to the details most people skip. Here's where those details are hiding in 2026.
How Estate Planning And Taxes Work In Idaho In 2026
Start with the state. According to the Idaho State Tax Commission, Idaho has no gift tax or inheritance tax, and its estate tax expired for deaths after 2004. Nothing at the state level is waiting to take a cut when you pass your business or property to the next generation.
The federal side got simpler, too. For 2026:
- Federal estate and gift tax exemption: $15 million per person, or $30 million for a married couple.
- Tax rate above the exemption: 40%.
- Annual gift exclusion: $19,000 per recipient, unchanged from 2025.
- Future adjustments: The One Big Beautiful Bill Act made the higher exemption permanent and indexed it to inflation, so it no longer drops by half on a scheduled sunset date.
The IRS estate tax page covers the filing thresholds and Form 706 if you want the source.
Why "Permanent" Still Deserves An Asterisk
Permanent means there's no built-in expiration date. It doesn't mean Congress can't change it. It also means some plans built in 2024 and 2025 to beat the old sunset, like rushed gifts of business interests or trusts funded in a hurry, may be worth a second look. A strategy designed for a deadline that no longer exists can create income tax problems it was never meant to solve.
Idaho Is A Community Property State, And That Changes The Tax Math
Idaho is 1 of only 9 community property states, and that gives married Idaho couples a tax advantage most of the country doesn't get. Under IRC Section 1014(b)(6), when the first spouse dies, both halves of community property get a new basis equal to fair market value, not just the half that belonged to the spouse who died. Planners call it the "double step-up."
Here's what that looks like for a business owner. Say a couple built an Idaho Falls company with a $300,000 basis that's now worth $2 million, and one spouse dies:
- Held as community property: The surviving spouse's basis resets to the full $2 million. Selling the company soon after creates little or no taxable gain.
- Held so only the deceased spouse's half steps up: The survivor's basis is $1.15 million ($1 million stepped-up half plus $150,000 original basis on their own half). Selling for $2 million creates $850,000 of taxable gain.
Same business, same value, very different tax bill. The catch is that the double step-up only applies to property that actually qualifies as community property. Assets owned before the marriage, inherited, or titled the wrong way may not qualify. Idaho law also allows community property with right of survivorship (Idaho Code Sections 15-6-401 and 15-6-402), which passes property to the surviving spouse without probate while keeping its community property character. Your attorney handles the titling; your CPA can show you what each option is worth in tax dollars.
Idaho's 60% Capital Gains Deduction For Idaho Property
Idaho adds a second break that matters when heirs or an estate eventually sell. According to the Idaho State Tax Commission, Idaho allows a deduction of 60% of qualifying capital gain net income from the sale of Idaho property, including:
- Idaho real property, including land and grazing permits, held for at least 12 months
- Tangible personal property used in a revenue-producing enterprise, like agricultural, processing, or manufacturing equipment, held for at least 12 months
- Cattle and horses held for at least 24 months, and breeding livestock held for at least 12 months
- Timber grown in Idaho and held for at least 24 months
Stocks and other intangible assets don't qualify, and neither does property located outside Idaho. Estates and trusts that sell qualifying property can pass the deduction through to beneficiaries. For Southeast Idaho families with farm ground, ranch land, or equipment-heavy businesses, that difference should factor into which assets to keep, sell, or pass on.
Own Property Outside Idaho? Check The State It Sits In
Estate tax isn't only about where you live. Some states tax nonresidents on real estate and other property located inside their borders, so a vacation home or rental in the wrong state can create a bill Idaho never would.
The good news for Southeast Idaho: Utah, Wyoming, and Montana have no state estate tax. Nationally, 12 states and the District of Columbia do, according to KeyBank's 2026 state-by-state summary, and several set their thresholds far below the $15 million federal exemption. If you own property in another state, check that state's rules before assuming the federal numbers are the only ones that apply.
Federal Vs. Idaho Estate Taxes At A Glance
| 2026 Rule | Federal | Idaho |
|---|---|---|
| Estate tax threshold | $15 million per person | No estate tax |
| Top rate | 40% | None |
| Gift tax | Yes, after $19,000 annual exclusion | None |
| Inheritance tax | None | None |
| Double step-up on community property | Allowed under IRC 1014(b)(6) | Yes, Idaho is a community property state |
| Capital gains break at sale | Long-term capital gains rates | 60% deduction on qualifying Idaho property |
| Spousal portability | Yes, via Form 706 | Not applicable |
If your business operates in more than one state, you likely already file returns in each one and apportion your income between them. Poston Denney & Killpack handles that multistate work regularly. Your estate plan deserves the same multistate view your tax returns already get.
Estate Planning Tax Strategies To Handle Before December 31
Some of the most useful estate planning tax strategies are tied to the calendar year. Miss December 31, and that year's opportunity is gone for good.
- Use your $19,000 annual exclusion. You can give $19,000 to as many people as you want in 2026 without touching your $15 million lifetime exemption. Married couples can split gifts and give $38,000 per recipient. Unused exclusion doesn't roll over. The IRS gift tax FAQ explains the rules.
- Pay tuition or medical bills directly. Payments made straight to a school or medical provider on someone else's behalf don't count against your annual exclusion at all. Paying a grandchild's tuition directly means your $19,000 gift is still available.
- Front-load a 529 plan. A special election lets you count up to 5 years of annual exclusions ($95,000 per beneficiary, or $190,000 for a couple) toward a 529 contribution in a single year. It requires a gift tax return, so plan for Form 709.
- Think twice before gifting highly appreciated assets. When you gift an asset during your lifetime, the recipient generally takes your original cost basis. When the same asset passes at death, heirs usually get a step-up in basis to fair market value under IRC Section 1014. If you bought company shares for $200,000 and they're worth $1.2 million today, gifting them could hand your heirs a $1 million taxable gain that inheriting them would have erased. For married Idaho couples, holding community property until death can be worth even more, because both halves can step up.
- Get business interests valued before you gift them. Gifting shares of a family business or LLC means putting a defensible value on them, and minority or non-marketable interests may qualify for valuation discounts. Bruce Denney, CPA, CVA, holds the Certified Valuation Analyst credential and brings 20+ years of public accounting and tax experience to exactly this kind of question.
- Review beneficiary designations and titling. Retirement accounts, life insurance, and jointly titled property pass outside your will. An outdated beneficiary form can override an otherwise solid plan.
Why The Tax Side And The Legal Side Of Estate Planning Need To Talk
Estate planning and taxation usually live with 2 different professionals, and that split is where good plans quietly break. Your estate attorney drafts the will, the trust, and the legal documents. A CPA handles what happens to those documents at tax time: gift tax returns (Form 709), estate tax returns (Form 706), trust income tax returns (Form 1041), business valuations, and the income tax effect of every move.
That second half matters more for business owners than for almost anyone else. Trusts reach the top federal income tax bracket at a much lower income level than individuals do, so a trust that holds income-producing business assets without a distribution plan can quietly overpay. Kevin Killpack, CPA, has spent his career in accounting and management consulting for small and large businesses, and succession planning is where that consulting experience earns its keep.
Poston Denney & Killpack is BBB accredited with an A+ rating and works alongside your attorney and financial advisor rather than replacing them. When all 3 advisors work from the same numbers, your plan stops contradicting itself.
Don't Skip Portability Just Because No Tax Is Due
When the first spouse dies, the surviving spouse can claim the unused federal exemption through an election called portability. The catch is that it has to be elected on a Form 706, even when the estate owes nothing. IRS Revenue Procedure 2022-32 gives estates that weren't otherwise required to file up to 5 years to make the election, but waiting invites mistakes.
Year-End Estate Planning Checklist For Southeast Idaho Business Owners
- Total the gifts you've made in 2026 and decide whether to use the rest of your $19,000 per-recipient exclusion before December 31.
- Confirm how your major assets are titled: community property, community property with right of survivorship, or joint tenancy.
- Check whether assets you or your heirs might sell qualify for Idaho's 60% capital gains deduction.
- List any real or tangible property you own outside Idaho.
- Pull the cost basis on appreciated assets before gifting any of them.
- Schedule a business valuation if you plan to transfer ownership interests.
- Revisit any trust or gift plan built around the old 2026 sunset.
- Confirm your beneficiary designations match your current wishes.
- Put your CPA and estate attorney in the same conversation.
For the income tax side of your year-end moves, see our tax planning services. If succession is on your radar, our business accounting services cover the planning that comes before an ownership transfer.
Frequently Asked Questions About Estate Planning And Taxes In Idaho
Does Idaho have an estate tax?
No. Idaho has no estate tax, inheritance tax, or gift tax. The state's estate tax expired for deaths after 2004, according to the Idaho State Tax Commission. Idaho residents only need to plan around the federal estate tax and any tax from other states where they own property.
What is the double step-up in basis in Idaho?
Idaho is a community property state, so when the first spouse dies, both halves of qualifying community property get a new basis equal to fair market value under IRC Section 1014(b)(6). That can wipe out years of built-in capital gain for the surviving spouse. Property owned before marriage, inherited, or titled as something other than community property may not qualify, so titling matters.
How much can I leave my heirs without paying federal estate tax in 2026?
The federal estate and gift tax exemption is $15 million per person in 2026, or $30 million for a married couple. The exemption is now permanent under the One Big Beautiful Bill Act and adjusts for inflation each year. Estate value above the exemption is taxed at 40%.
Is estate planning tax deductible?
Usually not on a personal return. Fees for personal estate planning fall into miscellaneous itemized deductions, which are no longer deductible for individuals, and the One Big Beautiful Bill Act made that change permanent. Fees tied directly to operating or restructuring a business may be treated differently, so ask your CPA how your specific invoices should be handled.
Do I owe estate tax in another state if I live in Idaho?
Possibly, if you own real estate or other tangible property in a state with its own estate tax. Twelve states and the District of Columbia have one, and some set thresholds far below the federal exemption. Utah, Wyoming, and Montana do not have a state estate tax.
What is the deadline for the 2026 annual gift exclusion?
December 31, 2026. The $19,000 per-recipient exclusion applies to each calendar year and doesn't carry forward. Gifts above the exclusion require a Form 709 gift tax return, generally due April 15 of the following year.
Do I need a CPA or an estate attorney for estate planning?
Most business owners need both. An estate attorney drafts wills, trusts, and other legal documents, while a CPA handles gift, estate, and trust tax returns, business valuations, and the income tax effects of your plan. The best results come when both are working from the same numbers.
Talk To A CPA Before The Calendar Runs Out
The 2026 rules are generous, but December 31 isn't moving. If you own a business, hold property outside Idaho, or have a plan built around rules that have since changed, now is the time to run the numbers. Poston Denney & Killpack has served Southeast Idaho since 1984, and we return calls. Call us at (208) 522-0886 or contact our Idaho Falls office to talk through your estate plan's tax picture before year-end.
This article is general information, not legal or tax advice for your specific situation. Talk with your CPA and estate attorney before making gifts or changes to your estate plan.
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