The Estate Tax Exemption Is Dropping by Six Million Dollars

Ashley Sharek
2 days ago
3 min read

A Major Tax Shift Is Coming

There is a big change coming to estate taxes. If Congress does not act, the federal estate tax exemption will be reduced by nearly half on December thirty first, two thousand twenty five. This means families could lose millions of dollars to federal estate taxes if they do not plan ahead. In this article, we will explain what the estate tax exemption is, what is changing, and how Pennsylvania families can protect their legacy.

What Is the Estate Tax Exemption

The federal estate tax exemption is the amount of money you can pass on to your heirs without paying estate tax. If your estate is below this amount, it is not subject to federal estate tax. If it is above the exemption amount, your estate could owe up to forty percent in taxes on the amount that goes over the limit.

What Is Changing in Two Thousand Twenty Five

Under the two thousand seventeen Tax Cuts and Jobs Act, the exemption amount was temporarily increased. That law will expire at the end of two thousand twenty five.

If Congress does not pass a new law, the exemption will go back to earlier levels, adjusted for inflation.

Here is what that looks like:

Current exemption in two thousand twenty four

About thirteen point six million dollars per person
About twenty seven point two million dollars per married couple

Starting in two thousand twenty six

About six point eight million dollars per person
About thirteen point six million dollars per married couple

This is a decrease of approximately six million dollars per person. Any estate over the new limit could face a tax rate of up to forty percent.

Who Should Be Concerned

If your estate includes real estate, investment accounts, life insurance, retirement accounts, or business ownership, you may be affected by this change. Even if you are under the current exemption, your estate could grow over the next few years and push you above the new lower threshold.

Families who have worked hard to build generational wealth need to take this seriously. Without a plan, your heirs could be forced to sell assets or lose a large portion of their inheritance to the government.

How to Reduce or Eliminate Estate Taxes

There are many legal strategies available to reduce or avoid estate taxes altogether.

At Entrusted Legacy Law, we create personalized plans using tools such as:

Irrevocable trusts
Lifetime and annual gifting strategies
Charitable giving
Family limited partnerships
Business succession planning
Life insurance trusts

Each plan is built around your specific goals and financial picture. With the right approach, families can preserve more of their wealth and pass it on to the people and causes they love most.

Timing Matters — Why You Should Act Now

This is a rare window of opportunity. Right now, the higher exemption is still available. Acting now allows you to use that higher amount and lock in significant tax savings for your estate. Waiting until two thousand twenty six could mean missing out on millions in tax-free transfers. We encourage families to plan ahead, not wait for Congress to act.

Your Family Deserves to Keep What You Built

You worked hard to build your legacy. Do not let estate taxes take it away. With proper planning, you can protect your loved ones, minimize taxes, and make sure your assets go exactly where you want them to go.

Let us help you make that happen.