With no clear winner emerging in the presidential election less than two weeks out, many higher income taxpayers are preparing their finances to protect their assets from potentially higher taxes, experts said.
If former President Donald Trump’s tax cuts expire as scheduled at the end of 2025, one of the most significant changes will be the reduction in federal estate and gift tax exemptions.
Under the Tax Cuts and Jobs Act of 2017 (TCJA), the exemptions were effectively doubled. The exemption in 2025 is $13.99 million per person, up from $13.61 million in 2024. However, these increased exemptions are set to revert to approximately $7 million ($5 million when adjusted for inflation) after 2025, unless Congress extends the provision.
The Tax Policy Center estimates that just over 7,000 returns will pay estate taxes in 2024, while nearly triple that number (around 19,000 returns) will pay estate taxes when thresholds drop after 2025.
That’s not a large percentage of Americans, but many who are in that group are taking the time now to plan, experts said.
How much is at stake?
The estate tax rate ranges from 18% to 40%, depending on the amount above the exemption amount. For each tax tier, you pay a base tax charge and an additional marginal rate.
Some states also levy an estate tax, but exemption levels and the top tax rates are usually much lower than the federal government’s.
Is it too early to plan without knowing the election outcome?
“There’s no downside to doing…
