The landscape of estate planning is undergoing a significant shift. One important modification is the 2026 estate and gift tax exclusion. It was on an upward trajectory but is now set to dramatically reduce. According to the Congressional Budget Office, "estate and gift taxes are often considered together because they are subject to the same rate and share the lifetime exemption amount. However, one main difference is that the estate tax applies to transfers of the decedent’s property at death, whereas the gift tax applies to transfers made during his or her life."
While many changes have occurred to estate and gift taxes in the past 40 years, here's what will happen in 2026, and how the estate planning attorney at Ruggiero Law Offices can help you plan ahead.
Understanding the 2026 Changes
The roots of these changes relate to the Tax Cuts and Jobs Act (TCJA) of 2017. It laid the groundwork for a substantial transformation in estate tax regulations. With the TCJA set to expire on December 31, 2025, people can expect a big impact on the estate and gift tax exclusion. The Congressional Budget Office projects the exemption amount to drop $6.4 million per person, which is nearly half.
The impending reduction in exemption amounts will significantly impact individuals’ ability to transfer wealth without incurring substantial tax liabilities. As of now, the generous exemptions provide considerable leeway for estate planning, allowing individuals to shield a substantial portion of their assets from taxation.
How Ruggiero Law Offices Help You Navigate the Change
Adapting to these modifications requires strategic estate planning. Our top recommendation is for individuals to evaluate their current estate plans and consider adjustments to align with the revised exclusion limits. Being proactive in this regard can potentially save heirs from hefty tax burdens in the future.
Next, we advise exploring the strategic use of trusts as another avenue to navigate the estate law changes. Certain trusts can be instrumental in maximizing the benefits of the increased exclusion limits, offering a structured approach to wealth transfer while minimizing tax implications.
Staying informed and adjusting strategies accordingly is also essential for navigating the evolving financial landscape and securing the financial well-being of future generations. Taking action now can help mitigate potential tax implications and ensure a smoother transition of assets.
At Ruggiero Law Offices, we have a deep understanding of complex tax and trust strategies and a unique ability to translate sophisticated planning techniques into clear, actionable steps. We believe in having authentic conversations about your family's needs and concerns and crafting solutions that give you confidence about the future.