New Estate Tax Law: What You Need to Know Now
Discover how the new estate tax law affects your planning strategy.
Have you heard about the recent changes to estate tax laws? The One Big Beautiful Bill Act, signed into law on July 4, 2025, is set to transform estate planning for many U.S. residents. This landmark legislation permanently raises the federal lifetime gift, estate, and generation-skipping transfer tax exemptions to $15 million per individual and $30 million for married couples, effective January 1, 2026. This is a significant leap from the current exemption amounts of $13.99 million per individual and $27.98 million per couple for the year 2025.
These changes not only provide clarity for the future but also present a unique opportunity for high-net-worth individuals and families to reassess their estate plans. With these new exemption limits, individuals who have fully utilized their current exemptions may find an additional $1.01 million available in 2026, while married couples stand to gain $2.02 million. This means that if you’ve been holding off on making gifts, it might be time to act to lock in asset growth outside of your estate before potential changes in future administrations.
However, it’s crucial to note that this new legislation does not apply uniformly across all states. For instance, New York has its own estate tax exemption set at $7.16 million for 2025 and does not conform to the federal changes. New York residents should be particularly cautious due to its unique estate tax rules, including a three-year clawback period for gifts and a cliff tax that could render estates exceeding the exemption liable for taxes. In contrast, Connecticut has aligned its estate tax exemption with federal law, currently matching the $13.99 million limit.
Given these differences, it’s wise for individuals to consult with their estate planning attorneys to tailor strategies that fit their specific circumstances. This is especially true in light of the new exemptions and the potential for future tax law changes. As we move forward, the emphasis should be on embracing the current opportunities while remaining mindful of the evolving estate tax landscape.
As the clock ticks toward 2026, now is the time to review and possibly revise your estate plan. Making strategic gifts before the new exemptions come into play could yield significant tax savings. Don’t wait—take this chance to secure your financial legacy and ensure your estate plan is up-to-date with the latest legal changes.