What’s going on with the current exemption amounts?
As you know, 2025 is a year of limbo as far as the federal estate and lifetime gift tax exemption is concerned. The amount is currently $13.99 million per person or $27.98 million per married couple. These rates are in place because the Tax Cuts and Jobs Act of 2017 (“TCJA”) doubled the exemption at the time (previously $5.49 million per person) and has been indexing it for inflation ever since. That said, the increased exemption amounts under the TCJA are set to sunset at the end of 2025, unless Congress takes action to extend them.
The “Big Beautiful Bill” aims to increase the federal estate and lifetime gift tax exemption to $15 million for individuals and $30 million for married couples, indexed for inflation, starting in 2026. The proposed changes would also make the current exemption amounts permanent, meaning that there would not be another sunset event like the one in the TCJA. Of course, Congress may always adjust the federal estate and lifetime gift tax exemption amounts by introducing subsequent legislation, so even if the “Big Beautiful Bill” is passed, it will still be worth keeping an eye on, especially if there is a shift in the balance of power along party lines.
Status of the Bill
The “Big Beautiful Bill” narrowly passed the House of Representatives, with some GOP members worried about the impact on the deficit. As of this writing, the "Big Beautiful Bill" is under consideration in the Senate, which has indicated that it would like to make substantial revisions to some of its other provisions (e.g., increasing the tax deduction for seniors to $6,000 and modifying the child tax credit). The bill is expected to be the subject of discussion through the month of June 2025, with a target date of July 4, 2025, for enactment. The coming weeks will hopefully provide insight into what will happen with the current federal estate and lifetime gift tax exemption amounts so that we can plan through the rest of the year.
Regardless of the proposed changes, it's still advisable for high-net-worth individuals to review their estate plans and consider strategies like trusts, wills, and marital property agreements.
About the author
Sarah Clifford is a shareholder at Gallagher & Kennedy, advising individuals, families, and business owners with their estate planning to help manage and preserve wealth and assets. Her experience includes probate and trust administration, including representation of high-net-worth clients with complex trusts and estates.