Are You Prepared for an Estate Tax Sunset?

When does the Estate Tax Limit Sunset?

The federal estate tax threshold rose to $25.84 million in 2023 for married couples and $12.92 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 $6.8 million, adjusted for inflation, in 2026. Similarly, the current 40% maximum gift and estate tax rate will increase to 45%.¹

This provision in the TCJA has provided a significant increase to the amount of wealth that can be transferred free from estate tax upon death, nearly doubling the previous limits. But, with its scheduled sunset, this has created a temporary window of opportunity for estate planning to minimize tax liability.

What can I do to prepare for the Estate Tax Limit Sunset in 2025?

For high-net worth individuals, these changes will significantly impact your estate plan. Although this sunset is coming, the good news is that it's still a few years away. It’s important to start considering the implications now and planning for the changes. Without strategic planning, estates could end up facing a significant tax bill when the owner passes away.

We can help you with your financial and estate planning strategy, regardless of whether Congress decides to maintain the current threshold. Now may be an excellent time to get together and start thinking about your post-2025 strategy.

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1. USBank.com, 2023
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