The federal estate tax exemption is set to increase to $13.99 million per person in 2025. This means that estates valued below this amount will not be subject to federal estate taxes. Married couples can combine their exemptions, allowing them to shield up to $27.98 million from federal estate taxes.
However, this higher exemption is temporary and will expire at the end of 2025 unless Congress takes action to extend it. If the law sunsets as planned, the exemption could drop significantly in 2026, potentially subjecting more estates to federal taxes. In addition to the federal estate tax, some states impose their own estate taxes.
New York, for example, will increase its estate tax exclusion to $7.16 million in 2025.
Federal estate tax updates in 2025
Connecticut’s exemption will rise to $13.99 million, mirroring the federal amount.
Maine and Rhode Island are also increasing their exemptions, though by smaller amounts. While estate taxes are levied on the total value of an estate before assets are distributed, inheritance taxes are paid by the beneficiaries after they receive the assets. Starting in 2025, Iowa will eliminate its inheritance tax altogether, providing relief to heirs.
It’s important for individuals to stay informed about these changes and to plan accordingly. Those with significant assets may want to consider making gifts or setting up trusts to minimize their estate tax liability. Consulting with a financial advisor or estate planning attorney can help ensure that your assets are protected and your wishes are carried out.
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