2025 Estate Tax Updates: What You Need To Know

Estate planning plays a crucial role in protecting your financial legacy. With recent updates to federal estate tax laws, now is an excellent time to review your plan. Here’s a simplified breakdown from Bosshard Parke of the key changes for estate and gift tax in 2025 and what they could mean for your estate.

Key Updates For 2025

• Estate and Gift Tax Exemption:
  The lifetime federal estate and gift tax exemption has increased to $13,990,000 per person (or $27,980,000 per married couple) for 2025. This is up from $13,610,000 per person ($27,220,000 per married couple) in 2024.
• Annual Gift Tax Exclusion:
  The annual gift tax exclusion has increased from $18,000 in 2024 to $19,000 per recipient in 2025. This allows you to gift more tax-free each year without impacting your lifetime exemption or requiring a gift tax return.

What Happens After 2025?

Under current law, these increased amounts are temporary. Without action by Congress, the lifetime exemption will drop in 2026 to approximately $7,000,000 per person (or $14,000,000 per couple). Families with larger estates may face higher tax liabilities if no adjustments are made before the law changes.

Why This Matters

For individuals and families with substantial assets, these updates provide an opportunity to protect and transfer wealth tax-efficiently. However, the potential reduction in 2026 underscores the importance of planning ahead.

Next Steps

To make the most of the current laws, especially if you have substantial assets:

• Contact Your Estate Planning Attorney and Evaluate Your Estate Plan: Ensure it aligns with the updated thresholds.
• Review Gifting Strategies: Use the increased annual exclusion and lifetime exemption to reduce your taxable estate.
• Plan for 2026: Discuss strategies with your estate planning professional to address the potential decrease in exemption amounts.

These updates primarily impact individuals and families with significant wealth, such as those with large real estate holdings, family businesses, or high-value investments. For those below the thresholds, the changes may have less direct effect.

How Bosshard Parke Can Help

At Bosshard Parke, our experienced estate planning attorneys in La Crosse and Sparta are here to help guide you through these changes. We’ll help you understand how the updates impact your estate and create a plan that protects your legacy. Contact us today to schedule a consultation.

Disclaimer: This blog is for informational purposes only and does not constitute legal advice. For personalized guidance, consult a qualified estate planning attorney at Bosshard Parke.