The Tax Cuts and Jobs Act of 2017 did not abolish the federal estate tax, but it greatly eased taxpayers’ exposure until 2026. The estate tax exemption was $5.49 million per decedent in 2017, but the TCJA has increased that number to $11.4 million in 2019. With scant planning, a married couple can use both exemptions and leave up to $22.8 million to heirs this year, free of federal estate tax.
However, the estate tax exemption is scheduled to drop by about 50% in 2026, exposing more taxpayers to the current 40% tax rate on assets over the lower threshold. That exposure could come even sooner, if political shifts in the interim generate another new tax law that lowers the estate tax exemption. Swift action that anticipates a pullback on estate tax relief could wind up saving millions of dollars for certain taxpayers.
