Federal Estate Tax Exemption: Potential Changes Await in 2025
Federal estate taxes and exemptions are controlled by federal law, and there will be changes after 2025 (barring any new laws being passed between now and then). You must have accumulated a substantial net worth before the federal estate tax will apply to you (the federal estate tax exemption being $13,990,000 and a combined $27.98 million for married couples in 2025). If your (and your spouse’s combined) net worth exceeds the estate tax exemption, Lee Kiefer & Park’s guidance in structuring your estate plan and gifting could save you and your family a significant amount in estate taxes. Our estate planning attorneys at Lee Kiefer & Park will discuss federal estate taxes and exemptions to help you understand the basics.
Lee Kiefer & Park’s highly experienced estate planning attorneys in Las Vegas, Greg J. Carlson and Jordanna L. Evans, assist clients with estate planning throughout Nevada. Call us at 702-333-1711 to schedule a free consultation to discuss your estate planning needs.
What is the Federal Estate Tax?
The Federal estate tax is a tax on your right to transfer of property when you pass away, according to the Internal Revenue Service (“IRS”). In determining the estate tax, your estate would account for everything you owned or had particular interests in when you passed away (Form 706 PDF). The asset’s fair market value is used, not necessarily what you paid for the asset or its value when you acquired the asset. The total combined value of these assets is your “gross estate.” Your gross estate may be comprised of real estate, insurance, cash, business interests, securities, annuities, and/or other assets.
Once the gross estate is established, certain deductions and reductions in value result in your “taxable estate.” Deductions can include:
- Mortgages;
- Other debts;
- Estate administration expenses; and
- Property passing to surviving spouses and qualified charities.
The value of some operating farms or business interests can be reduced for qualifying estates. You then add the value of lifetime taxable gifts, and compute the estate tax. The applicable unified credit then reduces the calculated estate tax.
What is a Federal Estate Tax Exemption?
Most simple estates don’t require filing a federal estate tax return because they are valued less than the estate tax exemption. For 2025, the first $13,990,000 in someone’s estate is exempt from the federal estate tax (a combined exemption of $27.98 million for married couples).
If your estate is large enough to surpass the exemption threshold, the estate tax is steep. The first $1+ million beyond the exemption is taxed at 40%, so there’s plenty of incentive to keep the exemption high.
Why is the Federal Estate Tax Exemption an Issue in 2025?
The current exemption level was set by the Tax Cuts and Jobs Act (TCJA), according to Kiplinger, which passed in 2017. Under that law, as of 2026, the estate exemption amount would return to a lesser amount ($5 million adjusted for inflation) unless government action to extend the higher estate tax exemption occurs in 2025. Traditionally, Republican Congress members and Presidents (and the incoming ones in particular) are adverse to federal estate taxes. Accordingly, many believe it is safe to assume the estate tax exemption won’t revert to the pre-TCJA exemption after December 31 this year, but nothing has happened yet to avoid that result, so it’s still possible.
What is Federal Estate Tax Portability and How Might It Help?
Portability of the federal estate tax exemption could be helpful for married couples.
For married couples, this “portability” can help reduce federal estate taxes. A decedent’s unused federal estate tax exemption amount can be transferred (because it’s “portable”) to the decedent’s surviving spouse by completing and filing a federal estate tax return upon the first spouse’s death.
The time for a late portability election covers up to five years after the spouse’s date of death. Making this portability election after a spouse’s death would be a good idea if the surviving spouse’s estate might be more than his or her own available federal estate tax exemption.
Contact Estate Planning Attorneys at Lee Kiefer & Park to Start the Discussion
If you have enough assets to trigger a federal estate tax, you should plan ahead to reduce or prevent the impact of the estate tax. Though the exemption level is high now, it might drop substantially next year.
Lee Kiefer & Park estate planning lawyers Greg J. Carlson and Jordanna L. Evans are highly experienced Las Vegas attorneys who plan estates for clients like you throughout Nevada. If you or your family might benefit from estate planning, whether in Las Vegas or Henderson, contact our estate planning lawyers for a free consultation by completing our confidential contact form. You can also call us at 702-333-1711 to speak with an estate planning attorney in Las Vegas, Nevada, who’s experienced in federal estate tax exemption issues.
Attorney Kennedy Lee practices in all aspects of trust and estate law. He views all legal issues from multiple angles (e.g. from litigation to administration point of view) to provide a higher quality of service to our client.
