Will Trump Extend the Federal Estate Tax Exemption?

Prior to the 2024 Presidential Election, there was much talk about the “sunsetting” of the federal estate and gift tax exemption. Initially enacted in 2017 as part of the Tax Cuts and Jobs Act, this law considerably reduced estate tax obligations for high-net-worth families across the country. Now that President Trump has won, the question is whether he will extend these exemptions past the end of 2025. An estate planning lawyer in Tampa may be able to help families address this issue.

Trump Plans to Extend the Tax Cuts and Jobs Act 

The extension of the Tax Cuts and Jobs Act (TCJA) was a key part of Trump’s platform during his electoral campaign. He has clearly signaled his intention to extend existing estate and gift tax exemptions past 2025, allowing families to continue benefiting from these tax laws for the foreseeable future.

When the TJCA was first enacted in 2017, it was given an “expiry date” of 2026. This is also known as “sunsetting.” Assuming that Trump extends the TJCA in 2025, one can assume that it will have a similar expiry date. As a result, the extended estate and gift tax exemptions could sunset sometime around 2032.

This decision could have considerable implications for estate plans across the country, particularly among high-net-worth families. Leading up to the election, many of these families rushed to take advantage of existing exemptions – fearing that they might soon disappear under an administration that had no intention of extending them.

Trump’s victory could give these families enough “breathing space” to carefully consider their estate planning options without rushing certain decisions. That being said, it is generally a good idea to act quickly when it comes to estate planning – whether the TJCA is set to expire soon or not. You never know what might happen in the future, and it’s better to be safe than sorry. Once you have established a clear estate plan, you can proceed with clarity and peace of mind. Unnecessary delays offer few benefits when it comes to estate planning.

The Estate Tax Exemption Increases Each Year With Inflation

 It is important to note that if the TJCA is extended for another seven years, it could continue to increase dramatically due to inflationary adjustments. In 2024, the exemption increased from $12,920,000 to $13,610,000. If it continues to increase at a similar pace each year until 2032 (and perhaps beyond), the exemption could become much greater. Stubborn, “sticky” inflation will likely continue, and families may want to keep this in mind when taking advantage of the TJCA extension.

Can an Estate Planning Lawyer in Seminole Help? 

Although Trump is set to extend the federal and estate tax exemptions of 2017, there are many unanswered questions about the road ahead. Families in New Port Richey may wish to check in with their estate planning lawyers to discuss how recent political changes could affect existing estate plans. Consult with Knudsen Law today to plan effectively for the future.

Sources: 

klawtb.com/tampa-estate-gift-taxation-attorney/

crfb.org/blogs/tcja-extension-could-add-4-5-trillion-deficits