May 15, 2025 •Dan Bomhoff
The federal estate and gift tax exemption is at a historic high, but that favorable tax treatment is set to change significantly at the end of 2025. Business owners and high-net-worth individuals should take time now to understand what changes may be coming and evaluate whether their current estate plans need to be updated.
Below is a summary of what you need to know about the potential impact of the exemption reduction, along with strategies that may help protect generational wealth and prevent costly delays.
Understanding the Current Exemption
The 2017 Tax Cuts and Jobs Act temporarily doubled the federal lifetime estate and gift tax exemption. As of 2025, the exemption stands at $13.99 million per individual, allowing married couples to exclude nearly $28 million from federal estate or gift tax.
If Congress does not pass new legislation to extend or revise it, the exemption will automatically expire on December 31, 2025. That would cut the exemption in half, leaving estates above the new lower threshold subject to tax. Although there is currently some progress on proposed legislation to extend these tax cuts, nothing is certain until Congress passes a bill, and the President signs it into law.
Taxpayers who delay planning may find themselves exposed to new estate tax liabilities. This is particularly important for estates currently valued between $7 million and $14 million, which are not subject to tax under current law but may be taxed after 2025.
Using the Current Exemption to Your Advantage
One of the most effective ways to take advantage of the current law is to make large gifts in 2025 while the exemption remains at its higher level. Taxpayers may choose to gift cash or other assets, either outright or through a trust. In doing so, they preserve the use of the higher exemption and reduce the value of their taxable estate.
Some individuals are preparing for this shift by creating and minimally funding trusts now, while waiting to complete larger transfers later in the year. This approach offers flexibility while ensuring that the necessary structures are in place if the decision is made to act before the exemption changes.
For those considering significant gifts, the IRS has confirmed that it will not claw back amounts transferred under the higher exemption, even if the exemption later decreases.
The Hidden Dangers of a “Wait and See” Approach
While it might seem logical to wait and see whether Congress acts, that strategy carries real risks. As the deadline approaches, there will likely be a surge of individuals attempting to finalize complex estate plans. This could overwhelm the availability of estate planning attorneys, CPAs, and valuation experts. Those who wait too long may not be able to complete their plans before the exemption is reduced.
Rather than wait and hope for legislative clarity, we encourage you to prepare now. Even if no action is taken right away, having legal structures and professional guidance in place ensures flexibility if the need to act arises later in the year.
Move Forward with Confidence
HoganTaylor brings deep expertise and personal commitment to every engagement. Our team understands the technical complexities and the emotional weight of planning for the future. We will work closely with you, your attorneys, and additional advisors to help create flexible, efficient strategies that protect what matters most.
If your estate could be impacted by the scheduled changes to the exemption, now is the time to act. Let us help you evaluate your options and develop a plan that reflects your values, goals, and legacy.
Reach out to a HoganTaylor professional today and move forward with confidence.
HoganTaylor Estate Planning Services
HoganTaylor estate planning professionals leverage their tax and business advisory expertise to help individuals accomplish goals and minimize tax burden. If you have any questions about the content of this publication, or if you would like more information about HoganTaylor's Estate Planning services, please contact Dan Bomhoff, Estate Planning Lead.
INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.
Get Updates
