Estate Tax and the Post 2024 Election
By Attorney Bryce Kaufman
President elect Donald Trump’s victory has significant implications for the future of the estate tax exemption established under the 2017 Tax Cuts and Jobs Act (TCJA). The TCJA temporarily increased the federal estate and gift tax exemption, which, adjusted for inflation, stands at $13,610,000 per individual and $27,220,000 per married couple in 2024. This elevated exemption is scheduled to revert to pre-TCJA levels on January 1, 2026, unless legislative action is taken to extend or modify it.
Given the Republican Party’s control of the Senate and the House, there is a strong possibility that the current higher exemption levels will be maintained or even made permanent.
Trump is expected to advocate for extending the TCJA tax cuts, including the estate tax exemption. However, given the estimated $4 trillion cost and concerns over the national debt, Republican leaders in Congress might be less inclined to extend all expiring tax cuts under the TCJA.
Possible Future Scenarios for the Estate Tax
The two most likely scenarios involve either maintaining the status quo or allowing the exemption to expire.
- Maintain the Status Quo. Congress and President elect Donald Trump could choose to extend the current estate tax exemption and keep the 40% top tax rate. Trump has expressed a desire to make the 2017 TCJA tax cuts permanent, which would likely include the current estate and gift tax exemptions. This would mean the current exemptions of $13,610,000 (increasing to $13,990,000 starting in 2025) for single individuals or $27,220,000 (rising to 27,980,000 starting in 2025) for married couples remain intact, with amounts below these thresholds untaxed at the federal level. However, even with GOP control of Congress, securing enough votes for an extension could be challenging.
- Do Nothing. If Congress does not act, the TCJA’s higher estate tax exemption will expire, dropping to approximately $7 million in 2026 while maintaining the 40% tax rate.
The two most likely scenarios involve either maintaining the status quo or allowing the exemption to expire.
- Eliminate the Federal Estate Tax. There is also ongoing support within the Republican Party to abolish the federal estate tax altogether. The Death Tax Repeal Act, which has gained traction in both the House and Senate, calls for the complete repeal of the estate tax and the generation-skipping transfer tax.
- Adjust the Estate Tax Rate or Exemption Amount. Another possibility is lowering the estate tax rate or increasing the exemption amount. Project 2025, a blueprint backed by the Heritage Foundation for the next Republican administration, proposes capping the estate tax rate at 20% and making the current $13.6 million exemption permanent, adjusting it annually for inflation. Some Republican lawmakers are advocating for an even higher exemption.
Maybe something in between?
- Compromise. The last possibility is simply finding a middle ground. A compromise could involve setting an estate tax exemption between the current $13.6 million and a lower figure, like $7 million. Alternatively, lawmakers could leave the higher exemption in place but slightly increase the tax rate.
As a reminder, under current Oregon and Washington law, the state estate tax exclusion threshold is $1 million in Oregon and $2.193 in Washington. Estates valued over this threshold may be subject to Oregon or Washington estate tax, regardless of federal estate tax laws or exclusions. Currently, neither state has campaigns with traction to alter this state level estate tax.
Planning in Uncertain Times
Without a clear picture of the future, it’s essential to focus on flexible estate planning strategies. Examples include:
- Annual Gifting: Individuals can gift up to the annual exclusion amount ($18,000 in 2024, $19,000 in 2025) to as many people as they wish without incurring gift taxes. Larger gifts may also be made utilizing the current lifetime exemption before 2026 to avoid potential claw backs.
- Irrevocable Trusts: Individuals can transfer assets outside of their taxable estates by creating irrevocable trusts. There are several types of irrevocable trust depending on your specific goals. This strategy removes the appreciation of these assets from the estate and may minimize gift tax liabilities.
Rylee Griffith
Legal Assistant
What is your favorite food: Pizza for sure, but it depends where I get it from. My favorite toppings depend on where I’m buying it from. Also, pineapple DOES belong on pizza.
What do you enjoy doing in your spare time: In my spare time, I’m either at the gym, napping, or meal prepping for the week ahead. You may also find me playing coed indoor soccer on Tuesdays!
Most memorable place you have vacationed: A trip that really stands out is when I went to Colorado to visit my best friend who lives there. We did a few hikes and traveled around Boulder. It was just so beautiful and we even got matching tattoos!
Baked Feta Pasta*
Ingredients:
- 2 pt. cherry or grape tomatoes
- 1 shallot, quartered
- 3 cloves garlic, smashed
- 1/2 c. extra-virgin olive oil, divided
- Kosher salt
- Pinch of crushed red pepper flakes
- 1 (8-oz.) block feta
- 3 sprigs fresh thyme
- 10 oz. pasta
- Zest of 1 lemon (optional)
- Fresh basil leaves, for serving
Directions:
- In a large ovenproof skillet or medium baking dish, combine tomatoes, shallot, garlic, and all but 1 Tbsp. oil; season with salt and red pepper flakes and toss to combine.
- Place feta into center of tomato mixture and drizzle with reserved 1 Tsp. oil. Scatter thyme sprigs over tomatoes.
- Bake until tomatoes are bursting and feta is golden on top, 40 to 45 minutes.
- Meanwhile, in a large pot of boiling salted water, cook pasta, stirring occasionally, until al dente according to package directions. Reserve 1/2 c. pasta water before draining.
- To skillet, add cooked pasta, reserved pasta water, and lemon zest (if using) and stir until combined. Top with basil.
*Source: Delish.com
Estate Planning & Peace of Mind
Have you found yourself making excuses for why not to get your estate in order? Maybe you’re convinced that you really don’t need estate planning. If you have assets and loved ones, you need an estate plan. Having an estate plan that is right for you ensures your loved ones are taken care of and that the transition is as easy as possible.
Attend one of our complimentary estate planning webinars and see for yourself. Having your estate plan prepared and understanding the why’s behind the importance of estate planning can bring you the peace of mind you have been needing.
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