What The Latest Federal Legislation Means For The Estate Tax
In July, President Trump signed the One Big Beautiful Bill Act into law. The wide-ranging law has some important implications for the federal estate tax. Most notably, it makes permanent the increased exemption threshold that was set to expire at the end of the year. At Fisher Law LLC, we handle estate tax matters. Here, our Boston estate planning attorney provides an overview of the key things to know about federal law and the estate tax.
Background: Estate Tax Exemption Was Set to Sunset in 2025
The estate tax exemption sets the threshold at which the federal estate tax applies. For smaller estates, there is no federal estate tax liability. Notably, congress doubled the federal estate tax exemption in 2017 under the Tax Cuts and Jobs Act (TCJA). However, it would only be a temporary change in that law. The higher threshold (adjusted annually for inflation) was set to sunset at the end of 2025. Without new legislation, the exemption would have reverted to prior levels. In other words, many more estates would have been exposed to the federal estate tax. The One Big Beautiful Bill Act resolves that multi-year uncertainty over this issue. It removes the sunset provision.
Federal Legislation has Made the Estate Tax Exemption Threshold Permanent
The new law permanently fixes the estate tax exemption at its current level, indexed annually for inflation. In 2025, the exemption stands at nearly $13.5 million for individuals and $27 million for married couples filing jointly. Estates below that amount will not incur federal estate tax liability. The permanence of the rule offers predictability in planning. Wealthy families can now develop long-term strategies without concern that the exemption will sharply decline.
Note: Permanent in this context means that the estate tax threshold is no longer set to reverse. Of course, it could be changed by another bill. There are some lawmakers that strongly support such a change. As such, the issue still requires monitoring.
Massachusetts has a Lower Threshold for Estate Tax Liability
Families in Massachusetts must remember that state law imposes its own estate tax. The Massachusetts estate tax threshold is far lower than the federal standard. As of 2025, estates valued above $2 million are subject to the state tax. There are many estates that avoid federal liability while still facing state-level obligations. Given that the value of real estate in the Greater Boston area is above the national average, it is easy that estate tax planning is appropriate for a large segment of the Bay State population. It is not just for high net worth individuals and families. The use of trusts, charitable strategies, and other planning tools may help to mitigate estate tax liability that you may not have thought was a concern.
Call Our Boston Estate Planning Lawyer for Estate Tax Today
At Fisher Law LLC, our Massachusetts estate planning attorney has the skills and experience to handle estate tax planning matters. If you have any questions about the federal estate tax or the Massachusetts estate tax, please do not hesitate to contact us for a fully comprehensive, no obligation consultation. We provide estate planning services throughout the Greater Boston area.
Source:
congress.gov/bill/119th-congress/house-bill/1/text
