Bill Passage Means that Expanded Estate Tax Exemption Stays

As a wide range of policy objectives were included in what was called “One Big Beautiful Bill,” it can be easy to overlook some of its specific provisions. When President Trump signed the legislation on July 4, one of the results was that a drastic change in estate taxation was averted. 

The federal government exempts a certain amount of property from estate and gift taxation. This means that when the value of someone’s estate is under the specified amount, their estate is not subject to federal taxes. Under the Tax Cuts and Jobs Act passed in late 2017, the individual exemption amount was doubled to about $11 million, meaning that far fewer estates were taxed and even those that were only had to pay on the value above the exemption. However, this increase included a sunset provision that would have undone the increase at the end of 2025.

Incorporating annual adjustments for inflation, the lifetime estate and gift tax exemption rose to $13.99 million in 2025. With assistance from a qualified asset protection lawyer, this amount can be effectively doubled to approximately $28 million. Instead of these amounts essentially being cut in half for 2026, passage of the bill means that individuals will enjoy an increased lifetime exemption amount of $15 million, with spouses able to protect up to $30 million. Starting in 2027, the exemption will be indexed for inflation, preserving its real value over time.

Individuals and families who use strategic gifting as part of their estate planning strategy will also benefit from the permanent establishment of higher exemption amounts. You can provide up to $15 million in tax-free gifts to loved ones over your lifetime. The law also applies to the Generation Skipping Transfer (GST) tax, which is a levy imposed on transfers to individuals who are two or more generations younger than the donor, such as grandchildren or unrelated recipients of a specified age difference. With the exemption increase affecting GST tax thresholds as well, individuals can distribute wealth across generations with reduced fiscal impediments.

While some states impose their own estate and inheritance taxes, North Carolina no longer does. Accordingly, an estate here that falls below the federal threshold can be settled tax-free. Whether the federal exemption level affects you or not, it’s important to work with a knowledgeable estate planning attorney who can help advise you of the applicable laws and develop a program customized to your needs. 

Donald R. Fuller, Jr., PLLC in Hickory handles all aspects of estate planning for North Carolina clients. This includes the construction of trusts for asset protection in addition to my probate work. I enjoy working with individuals and families to create plans tailored to their specific situation. Please call 828-639-8188 or contact me online to schedule an appointment