“2025 Estate Tax Exemption: What You Need to Know Before Changes Take Effect”

The federal estate tax exemption is set to increase again for 2025, with the exemption amount being $13.99 million for individuals and $27.98 million for married couples. This higher exemption amount will save more estates from federal tax, potentially saving heirs from a higher tax bill. However, if the Tax Cuts and Jobs Act is allowed to expire in 2026, the exemption amount could revert to a lower base threshold. Estates exceeding the exemption amount will be taxed at a rate of 40%, with the tax increasing based on the value of the estate. The estate tax exemption is set to sunset at the end of 2025, but will adjust yearly for inflation even if key TCJA provisions expire. State estate taxes may also apply, with some states imposing their own estate taxes or inheritance taxes with varying exemption amounts. Subscribe to Kiplinger’s Personal Finance for expert advice on investing, taxes, retirement, and personal finance straight to your email.