New Estate Tax Changes Could Impact Millions of Families
Proposed legislation would dramatically lower the estate tax exemption. Families who thought they were safe may need to rethink their plans immediately.
Legislative Earthquake on the Horizon
Proposed federal legislation could cut the estate tax exemption from its current level of $13.61 million per individual to as low as $6 million. If enacted, millions of families who previously fell below the threshold would suddenly face significant tax exposure.
What Is Changing
The current elevated exemption was set to sunset in 2026 under the Tax Cuts and Jobs Act. New proposals would accelerate that timeline and potentially set the new threshold even lower than pre-2018 levels.
Who Is Affected
Under the current exemption, only about 0.1% of estates owe federal estate tax. A reduction to $6 million could increase that to 1-2% of estates — sounds small, but that represents hundreds of thousands of families annually.
Most at risk:
- Business owners whose company value pushes their estate over the threshold
- Homeowners in high-value markets (especially on the coasts)
- Families with significant retirement savings and life insurance
Planning Strategies
Estate planning attorneys are advising clients to:
What This Means For You
Even if the legislation does not pass in its current form, the existing exemption is scheduled to decrease automatically. Families with estates approaching $6 million should consult with an estate planning attorney now, before the rules change.