The federal estate tax threshold rose to $24.12 million in 2022 for married couples and $12.06 million for individuals, as part of the Tax Cuts and Jobs Act (TCJA). Like several TCJA provisions, the higher estate tax limit is due to sunset in 2025. Barring congressional action, the exemption amount will return to about $6.2 million, adjusted for inflation, in 2026. Similarly, the current 40% maximum gift and estate tax rate will increase to 45%.
For high-net worth individuals, this could influence wealth transfer strategies. Although this sunset is coming, the good news is that it’s still a few years away.
And there’s more good news: as financial professionals, we can help you with your estate strategy, regardless of whether Congress decides to maintain the current threshold. Estate planning is an essential piece of your financial plan and integrating the strategies and plans from your estate planning documents with your financial plan can help give a clear picture of your goals and desires. We would be happy to work with your current estate planning attorney or introduce you to one from our network if you are in need.
Now may be an excellent time to get together and start thinking about your post-2025 strategy.