Estate and Gift Tax Changes Are Here: What They Mean for Your Planning

The world of estate planning is always shifting, but 2025 has brought important clarity. New legislation affecting estate and gift tax exemptions is reshaping planning strategies for wealthy individuals and families. Here’s what you need to know—and how to take advantage of these changes. 

The Big Number: $15 Million Estate and Gift Tax Exemption by 2026

One of the most significant updates? The federal estate and gift tax exemption is increasing. Currently, the exemption sits around $14 million, but starting in 2026, it will increase to $15 million, with future adjustments for inflation.

This increase avoids the widely feared rollback to about $7 million in 2026 and actually provides $720,000 more in exemption than if lawmakers had simply extended the current law without changes. (The Joint Committee on Taxation projected that, under a straight extension, the exemption would have only risen to around $14.28 million.) 

Automatic Adjustments (and No Tax Rate Changes)

Alongside the increased exemption, the gift tax exemption (§2505(a)(1)) and generation-skipping transfer (GST) exemption (§2631(c)) will continue to track the estate tax exemption amount. This consistency is helpful for those looking to coordinate all three exemptions effectively. 

Even better, there are no changes to estate or gift tax rates, and no major revisions to the transfer tax rules. Despite the high projected cost of maintaining the current estate tax system (estimated at $211.7 billion) there was no serious push in Congress to repeal the estate tax altogether. 

What About a Repeal? Probably Not Happening

Although estate tax repeal has its advocates (such as Senator John Thune of South Dakota), a full repeal remains unlikely. Eliminating the estate tax would require significant budget offsets, potentially involving cuts to major programs like Medicaid or SNAP, making it politically challenging. 

Some policy proposals (like Project 2025) have suggested reducing the estate tax rate to 20%, but a complete repeal is not expected anytime soon. 

What This Means for You

So what does all this mean for estate planning strategy? A few key takeaways:

1. Less Pressure to Act Immediately. Good Time to Simplify Estate Planning

With a $15 million exclusion on the horizon, and inflation likely pushing that number north of $20 million within a decade, some clients may feel less urgency to make significant lifetime gifts right now. However, it is still an ideal time to review your estate plan and consider simplifying strategies put in place when exemptions were lower. Perhaps it’s time to terminate certain trusts that are no longer needed. 

2. More Flexible Planning Tools

Clients hesitant to give up assets permanently can still benefit from tools like Spousal Lifetime Access Trusts (SLATs), although the perceived urgency to “use it or lose it” may lessen with a higher exemption. 

3. High-Net-Worth Individuals Should Still Plan Ahead

Those with estates well above the exemption amount may want to make large gifts now to lock in today’s exclusion. Remember: future appreciation on transferred assets avoids estate tax, making early planning advantageous. 

4. Trusts Still Play a Big Role

Non-grantor trusts remain powerful tools, especially for income shifting and state tax planning. They can help with strategies such as stacking Qualified Small Business Stock (QSBS) exclusions, leveraging higher SALT deduction caps, and establishing trusts in tax-friendly jurisdictions. 

Bottom Line: Use the Breathing Room Wisely

The increased exemption gives many families more time and flexibility, but that doesn’t mean planning should be put off. Tax laws evolve, administrations change, and proactive strategies consistently deliver the best results. 

Now is the perfect time to review your estate plan. Talk with your Strauss Attorney advisors, and make sure you’re fully positioned to take advantage of the opportunities available today.