President Trump’s signature on the ‘One Big Beautiful Bill’ on July 4, 2025, reset the country’s Estate Taxes for the next decade. The law adjusts and makes permanent (at least until the next relevant bill is passed) the Federal Estate Tax at a 40% rate for any amount of an estate that exceeds fifteen million dollars. The $15M exemption takes effect January 1, 2026, and will be adjusted for inflation in subsequent years. This exemption is an increase from the existing exemption of 13.99 million dollars, and the forty percent tax rate remains constant. Families with less than fifteen million dollars will see no change in their estate treatment and will not need to update their estate plans in response to this law.
The Federal Gift Tax exemption remains linked to the estate tax exemption—large gifts in life will count against the total credit allowable at death. Smaller gifts ($19,000 and below) are exempt from gift taxes each year, and that exemption will continue to be indexed to inflation in the future.
These estate and gift tax credits are available to each person. Married couples can pass thirty million dollars tax-free at death so long as they wisely use their credits. Methods to ‘double’ the estate tax include a bypass trust and a portability filing to claim deceased spouse unused election credits.
One never knows what tomorrow’s tax laws will be, but it seems a safe bet that a large exemption and a tax rate near the highest income tax bracket will be around for a while. Further, if this Congress and administration did not repeal the Federal Estate Tax, it seems that the Estate Tax will be around for the foreseeable future.
One final note—each state can add their own estate and inheritance taxes. Virginia has not had one for over twenty years and has made no serious attempts to reinstate it since. We’ll keep an eye on the horizon and update you as changes come.
About the Author:
Dan lives in Williamsburg with his wife, Ginny, their children, and their black labrador. Moving around much in early years, his family settled in Northern Virginia where he attended high school. At William and Mary, he majored in history, minored in religion, and received a teaching certificate. Upon graduating, he taught high school social studies in Hampton before returning to William and Mary for a law degree. He practiced Estate Planning law in the Washington D.C. metropolitan area until he married his wife Ginny in 2005 and they soon returned to Williamsburg. Dan has been in private practice in Williamsburg since that move and enjoys speaking as an Estate Planning expert. His hobbies include playing music, paddling a canoe or kayak, and being a Scout leader.