What happens to the estate tax in 2026?

What are “Estate Taxes”?

“Estate taxes” tax the estates of relatively wealthy people. The tax is paid by the decedent’s estate, rather than by the recipient(s) of the estate’s assets.

Who is currently taxed?

Currently, individuals can pass at death a very high dollar amount tax free — $13,990,000 in 2025. Any assets you try to pass on above the limit are subject to a hefty 40% tax rate. Having said that, relatively few Americans have assets in excess of 14 million dollars to pass along to their heirs, so this is a relatively small portion of Americans.

What is set to happen at the end of 2025?

At the end of 2025, federal laws are set to change and the estate tax exemption will go down to about seven million dollars. Unless Congress acts by passing new laws, individuals who die in 2026 will owe estate taxes on all assets they pass down in excess of about seven million.

Will this change affect me?

Unless you have more than seven million dollars to give to your heirs, or if you expect to inherit money from someone else who does have that kind of money, this change will not affect you. If this change affects you, it means that you are relatively well off, and that is a good thing in itself.

How can I protect my assets from estate taxes?

A good place to start is a consult with an estate planning attorney. There are both simple and complex strategies for managing estate tax liability. A specialized estate plan will both minimize your estate tax liability, and make sure your estate has enough liquid assets to pay any taxes owed.

If you would like to meet with one of our attorneys to discuss your planning options, call us today at 414-276-4366.