By: Brigette Brinkert
Starting January 1, 2026, the estate and gift tax exemption amounts are set to revert to pre-2018 levels, effectively reducing the exemption by approximately half. This means the federal estate and gift tax exemption for US citizens and people who are domiciled in the US will decrease from the current $13.61 million per individual (for 2024, indexed for inflation) to around $6-7 million {also indexed for inflation).
This means that if you are a US citizen and your net worth is more than $5 million (for individuals} or more than $10 million (for married couples), you need to review and potentially revise your plans before the sunset provision takes effect.
If you are not a US citizen or not a domiciliary for estate tax purposes (which is different from domicile for income tax purposes), different rules apply, but a review and a potential revision is just as important.
This change above could have a significant impact on the amount of estate and gift taxes that your estate may owe upon death. It may be necessary to update your estate plan and/or consult with a tax advisor and advanced planning strategies specialist. Many advisors will be extremely busy towards the 2024 year-end and during 2025, so it is best to get the process started as soon as possible.
About the Author
Brigitte is originally from Switzerland and a California licensed attorney specializing in estate planning. She lives in Mountain View with her husband and her two children. To contact Brigette email her here.