Bitcoin Estate Tax Rules in 2026, in Five Numbers

Five numbers govern what happens to bitcoin at death in 2026: a federal estate exemption of $15 million per person and $30 million per married couple, a top federal estate tax rate of 40%, roughly a dozen states plus DC that levy their own estate taxes and five that levy inheritance taxes, a stepped-up basis to date-of-death fair market value on inherited bitcoin held outside a retirement account, and a blank basis field on Form 1099-DA for bitcoin transferred in from external addresses. The rules are settled. The two least discussed of them matter most. This is the tax landscape section of Onramp's report The Legacy Layer: Bitcoin IRAs & Estate Planning, in short form.

1. $15 million per person, $30 million per couple

The One Big Beautiful Bill Act of July 2025 fixed the federal estate, gift and generation-skipping transfer exemption at $15 million per individual and $30 million per married couple from 1 January 2026, made it permanent, and indexed it for inflation from 2027. For bitcoin holders, the practical question is whether the position, combined with everything else in the estate, is likely to cross that threshold by the time it transfers. For an asset held over decades, the answer at death can look very different from the answer today.

2. A top rate of 40%

Above the exemption, the federal estate tax applies at a top rate of 40%, assessed on the estate rather than on the recipient. Every container, whether a taxable account, a Traditional IRA or a Roth, sits inside the gross estate for this test. The tax wrapper changes how distributions are taxed as income. It does not remove the position from the estate. Moving bitcoin outside the taxable estate requires a trust structure, which is the subject of What Is a Bitcoin Dynasty Trust.

3. Twelve states plus DC, and five more

The estate tax is federal and falls on the estate. Inheritance taxes are a different instrument, levied by states on the recipient. As of 2026, roughly a dozen states plus the District of Columbia levy estate taxes and five levy inheritance taxes. Domicile therefore belongs in the planning conversation alongside the federal numbers, and for a holder who expects to relocate in retirement, the state they die in may matter as much as the state they accumulated in.

4. Date-of-death fair market value

Bitcoin is property under IRS Notice 2014-21. Inherited bitcoin held outside a retirement account takes a stepped-up basis equal to its fair market value on the date of death, under IRC section 1014, which eliminates the embedded capital gain for the heir. For a position that has appreciated many times over, this is likely the single largest tax efficiency available to the estate.

The exception is the one the report highlights first. Bitcoin inside a retirement account follows IRA distribution rules, not the step-up rule. A Traditional IRA balance reaches heirs as ordinary income and, under the SECURE Act, most non-spouse heirs must empty the inherited account within ten years. The arithmetic per dollar is laid out in What Happens to a Bitcoin IRA When You Die.

5. A blank basis field

Broker reporting on Form 1099-DA began in 2026. Bitcoin transferred into a broker from external addresses arrives non-covered, with the basis fields blank. The broker has no record of what was paid or when, and neither does the IRS. The holder's own records are the only continuous account of the position's cost basis.

This turns lifetime record-keeping into a critical chore for the owner and, eventually, for the executor. The step-up in basis at death resets that problem for the heir, but only once the estate has established what the decedent held and when. A position accumulated across multiple exchanges, hardware devices and custodians over fifteen years, with no consolidated record, is a position an executor may struggle to document.

Why the last two matter most

The exemption and the rate get discussed constantly. The step-up and the basis field get discussed rarely, and they are the two that decide whether a bitcoin position transfers efficiently or not. Whether the bitcoin is inside a retirement wrapper decides whether the step-up applies. Whether the holder kept records decides whether anyone can prove what the basis was. Both are choices made decades before they matter.

The full tax and legal section, the wrapper comparison, and the structures that can move bitcoin outside the taxable estate without changing the custody underneath it are all in The Legacy Layer: Bitcoin IRAs & Estate Planning.

Frequently asked questions

Is inherited bitcoin taxed?

Inherited bitcoin held outside a retirement account takes a stepped-up basis to fair market value on the date of death under IRC section 1014, so the heir owes no capital gains tax on appreciation before death. The position still counts toward the estate for federal estate tax, and some states levy estate or inheritance taxes of their own.

What is the federal estate tax exemption in 2026?

$15 million per individual and $30 million per married couple, fixed by the One Big Beautiful Bill Act from 1 January 2026, permanent and indexed for inflation from 2027. The top federal rate above the exemption is 40%.

Does bitcoin in an IRA get a step-up in basis?

No. Bitcoin inside a retirement account follows IRA distribution rules. Traditional IRA balances reach heirs as ordinary income, and most non-spouse heirs must empty an inherited IRA within ten years.

What is Form 1099-DA and why does it matter for inherited bitcoin?

Form 1099-DA is the broker reporting form for digital assets that began in 2026. Bitcoin transferred in from external addresses is reported with blank basis fields, so the holder's own records are the only continuous account of cost basis.

Related reading

• What Happens to a Bitcoin IRA When You Die
• What Is a Bitcoin Dynasty Trust, and Who Needs One
• Bitcoin Inheritance: A Spare Key Is Not a Deed
• Full report: The Legacy Layer: Bitcoin IRAs & Estate Planning

This article is research and analysis, not a recommendation to adopt any legal or tax structure. Onramp is not a law firm, an accounting firm or a tax practice, and nothing here is legal, tax, accounting or investment advice. Tax figures and rules described are federal, are current as of August 2026 including provisions of the One Big Beautiful Bill Act and the SECURE Act final regulations, and are subject to change. State treatment varies. Consult your own attorney, accountant and financial advisor before acting. Bitcoin is a volatile asset and its price can fall as well as rise.