As of mid-afternoon on November 13, several major news outlets announced that they are projecting the Republican party will retain control of the House of Representatives. With Republican control of the Presidency and both houses of Congress, we may now have some degree of clarity as to the future of the estate and gift tax laws. 

As a reminder, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law on December 22, 2017, increasing the federal estate, gift and generation-skipping transfer (“GST”) tax exemptions from $5,490,000 per individual in 2017 to $11,180,000 per individual as of January 1, 2018. These exemption amounts are annually adjusted for inflation for tax years after 2018. Thus, the exemptions for 2024 are $13,610,000 per individual, and are scheduled to increase again on January 1, 2025 to $13,990,000 per individual.  

However, significant portions of the TCJA are set to expire on December 31, 2025, including the estate, gift and GST exemption amounts, at which time the exemptions will revert back to the $5,000,000 figure set by the American Taxpayer Relief Act of 2012, as increased by inflation since 2010. Accounting for those inflation adjustments, this would mean the estate, gift and GST tax exemption amounts would be approximately $7,000,000 on January 1, 2026. The maximum federal estate, gift and GST tax rates will continue to be 40% on any transfers in excess of the individual exemption amounts.

With Republican control in Washington D.C., it is a very real possibility that the current historically-high estate, gift and GST tax exemption amounts may be extended. But we will have to wait to see what transpires in 2025 to confirm that. 

Our team is closely monitoring the political landscape and legislative actions that may arise in the coming months. We are committed to keeping you informed and will strive to communicate with you to provide relevant and timely guidance to help accomplish your objectives. In the interim, if you have any questions, please reach out to a member of our Estate, Succession and Tax Department.

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