Post-Election Estate & Gift Tax Update

Proactive Planning Remains Key

After much uncertainty leading up to the election, we now know that Republicans will control both the Presidency and Congress starting in early 2025. While uncertainty remains for what will happen with tax laws in the coming years, the results of the election give us greater clarity on the likelihood that the Tax Cuts & Jobs Act of 2017 (TCJA) will see extensions into 2026 and beyond, maybe with additional tax cuts built-in.

Currently, many of the major provisions in the TCJA are set to sunset at the end of 2025, which would have led to higher income taxes for many beginning in 2026. In addition, the estate and gift thresholds are set to get cut in half, from nearly $14 million in 2025 down to around $7 million in 2026. While Congress and the President will need to take action to extend or modify the tax cuts, Republican control makes it more likely that the TCJA will live on beyond 2025.

While this greater certainty in more favorable tax rates and estate thresholds means good news for taxpayers, it does not mean that there are not planning considerations that individuals and business owners should be considering. In particular, now is a great time to work with your attorney and your accountant on your estate planning. Even if you do not have to worry about paying estate tax (for most married couples, you’d currently need an estate of over $27 million before that would be an issue), having a good plan in place is critical to ensure that your assets go where you want them to when you pass away. At the same time, we can help make sure that your estate planning is efficient and effective from a tax perspective. Whether or not the estate and gift exemption goes down, proper proactive planning is imperative.

In the coming months, we will start to get an idea of what tax policy will look like under the new administration. In the meantime, working to have a well-prepared plan in place is critical to your short-term and long-term success from a tax perspective. Your team at HBE is prepared to support you every step of the way!