The federal estate tax exemption went up again this year. Though the higher IRS inflation-adjusted number may not come as a surprise to most.
However, 2025 will be a pivotal tax year. If the Tax Cuts and Jobs Act (TCJA) were left to expire, as of 2026, the estate exemption amount could revert to a lower base threshold.
But a recent U.S. House of Representatives GOP tax bill has called for extensions on many TCJA provisions.
For example, the House plan suggests permanently extending and further raising the estate exemption amounts to $15 million for single filers and $30 million for married filing joint couples.
However, the bill will go through many revisions in the House and the U.S. Senate before any final legislation is passed.
In the meantime, a higher exemption in the current year will save more estates from federal tax, which may save heirs the heartache of a higher tax bill. Here's what to know.
Current estate tax exemption
The federal estate tax doesn’t apply unless you hit a certain exemption amount.
- The exemption amount for people who pass away in 2025 is $13.99 million (up from $13.6 million last year).
- Married couples can expect their exemption to be $27.98 million (up from $27.22 million last year).
Federal estate tax rate
Only a certain percentage of estates will be subject to the federal estate tax. This is because the exemption is high for 2025.
However, estates valued over the tax amount will be taxed at a pretty hefty rate, with those exceeding more than $1 million ($14,990,000 or $28,980,000 combined for married couples) taxed at 40%.
Below is how much heirs can expect to pay based on an estate’s value:
Rate |
Taxable Amount (Value of Estate Exceeding Exemption) |
18% |
$0 to $10,000 |
20% |
$10,001 to $20,000 |
22% |
$20,001 to $40,000 |
24% |
$40,001 to $60,000 |
26% |
$60,001 to $80,000 |
28% |
$80,001 to $100,000 |
30% |
$100,001 to $150,000 |
32% |
$150,001 to $250,000 |
34% |
$250,001 to $500,000 |
37% |
$500,001 to $750,000 |
39% |
$750,001 to $1 million |
40% |
More than $1 million |
State estate taxes
Some states may impose an estate tax of their own (and the exemption amounts aren’t always as generous as the federal estate tax exemption).
For instance, in Massachusetts, the state estate tax exemption is just $2 million and isn’t indexed for inflation.
A few states also impose an inheritance tax, which can leave a tax bill for your heirs on even small amounts of money.
Nebraska, for example, imposes an inheritance tax on adult children when their inheritances exceed $100,000. In Kentucky, nephews and nieces only receive a $1,000 exemption.
Estate tax proposals
If Congress doesn't act, the federal estate tax exemption will sunset at the end of 2025. At that time, the exemption could drop to a base of $5 million (adjusted for inflation) in 2026.
However, the new so-called "One, Big, Beautiful Bill" tax proposal seeks to make the exemption permanent, and even increase the amounts for 2026:
- Single filers could receive an estate exemption of $15 million
- Married filing joint couples could receive an exemption from estate taxes of $30 million.
The estate tax exemption is also indexed for inflation. So even if key TCJA provisions expire, the estate tax exemption will adjust yearly for inflation. Once more, most tax-free gifts made before a potential drop in the lifetime gift and estate tax exemption wouldn't trigger higher tax bills in 2026 and beyond.
Period |
Exemption Amount |
2018 |
$11,180,000 |
2019 |
$11,400,000 |
2020 |
$11,580,000 |
2021 |
$11,700,000 |
2022 |
$12,060,000 |
2023 |
$12,920,000 |
2024 |
$13,610,000 |
2025 |
$13,990,000 |
House GOP estate tax plan
With Trump serving his second term as president and a Republican-led Congress poised to pass tax reform through reconciliation, many provisions of the TCJA will likely continue for some time.
The latest $4 trillion House GOP bill could provide for a full extension, or extend or raise only certain parts, of the TCJA (which includes the estate tax proposal previously mentioned).
Other TCJA tax provisions in the latest House bill include:
- Extending the increased standard deduction and temporarily raising the amounts
- Permanently eliminating the personal and dependency exemption
- Extending and temporarily increasing the child tax credit
As for a timeline on a possible TCJA extension, that's uncertain.
U.S. Treasury Secretary Scott Bessent has told reporters, "We’ve got three legs to the President’s economic agenda, trade, tax, and deregulation, and we hope that we can have this tax portion done by Fourth of July."
That is an extension of House Speaker Mike Johnson's (R-La.) original Memorial Day deadline for the "One Big, Beautiful Bill." And with the GOP split on the latest House bill, as reported by Politico, the timeline may be stretched even further.
Stay tuned for further developments.
