The Federal Estate Tax Exemption: What It Means for Your Family

For most of its history, the federal estate tax was something only the ultra-wealthy needed to think about. Today, thanks to decades of legislative changes, that's still largely true — but the landscape is shifting, and the window for current exemption levels may be closing.

As of 2024, the federal estate tax exemption is $13.61 million per individual — meaning an individual can transfer up to that amount at death without owing federal estate tax. A married couple can effectively shelter up to $27.22 million using the portability election, which allows a surviving spouse to use their deceased spouse's unused exemption.

Above the exemption, the federal estate tax rate is 40%. On a $15 million estate, the taxable amount above the exemption would be approximately $1.4 million — generating roughly $560,000 in federal estate tax.

What's changing: The current elevated exemption levels are set to sunset at the end of 2025 unless Congress acts. If the sunset occurs, the exemption will revert to approximately $7 million per individual (adjusted for inflation). Estates that are comfortably below the current threshold could find themselves suddenly exposed to estate tax.

Even if your estate doesn't approach federal exemption levels, many states have their own estate taxes with significantly lower exemptions. Texas does not currently impose a state estate tax, but if you own property in other states, those states' taxes may apply.

Planning strategies exist at every level: annual gifting, irrevocable trusts, charitable planning, and business valuation discounts can all reduce the taxable estate. The right strategies depend on your specific situation and how the legislative landscape evolves.

📌 Estate tax law is changing — and the time to plan is now, while exemptions are still high. Contact us to review your exposure and explore your options.