On July 4, 2025, President Trump signed into law the “One Big Beautiful Bill” – a massive package of new and extended tax cuts targeting a variety of sectors within the American economy. Of importance to estate planning professionals – and the many families we serve to help protect their legacies – the bill extends and increases the current federal estate tax exemption levels to $15 million for individuals and $30 million for married couples, beginning in 2026. The exemption levels will be increased annually, are subject to inflation rates, and are permanent. (Current levels were set to “sunset” or expire at the end of 2025.)
What does this mean for the vast majority of our estate planning clients and 99% of American families? Simply put, unless your net worth exceeds those levels upon your death, you can pass your estate to your loved ones “tax free.” This also simplifies the estate planning process for families and practitioners. Unless you are a “high net worth” family or individual, it will not be necessary to engage in advanced tax planning as part of your estate plan development to attempt to avoid taxes on your estate. However, it’s important to consult with a qualified estate planning attorney to address other issues such as the potential for capital gains taxes, taxes on retirement accounts, taxes on estate and trust income, etc.
It is also important to keep in mind that this exemption only applies at the federal level. Most states, like Virginia, do not have any estate or inheritance taxes, but some states (we are looking at you, DC and Maryland) do.
This news should come as a relief to many individuals who were concerned that the current exemption levels ($13.6 million for individuals and $27.2 million for married couples) would have expired and essentially been cut in half at the end of the year without passage of this legislation. Now, most can rest easy and focus on the other essential elements of estate planning, such as ensuring that their estate assets are protected for their chosen beneficiaries and making the process of administering their estate as painless and efficient as possible for their families.
