The 2025 Estate Tax Overhaul Is Now Law—Are You Still Protected?

In a major legislative move, Congress has officially passed and the President has signed into law a sweeping tax bill that includes pivotal changes to the federal estate and gift tax system. Signed into law on July 4, 2025, this new law aims to modernize wealth transfer rules, address perceived tax inequities, and reshape how families plan for the future.

Below is a breakdown of the key provisions and what they mean for your estate planning.

Key Provisions of the New Law

1. Increased Estate and Gift Tax Exemption

The federal estate tax and gift exemption has now been officially increased to $15 million per individual, or $30 million for married couples, adjusted annually for inflation starting in 2026. This significant jump in the exemption amount will dramatically reduce the number of estates subject to estate tax.

2. Annual Gift Tax Exclusion

Though yet unknown, the annual gift tax exclusion will also likely increase to $20,000 per recipient in 2026, allowing individuals to gift up to this amount each year to as many people as they like, without triggering gift taxes or using any of their lifetime exemption.

3. Step-Up in Basis

The step-up in basis provision continues to be a part of the U.S. tax code, allowing an heir inheriting an appreciated asset to have its cost basis reset to the fair market value at the time of the original owner’s death, in turn reducing potential gains upon sale.

4. Inflation Adjustments Built In

To ensure that the new exemption thresholds remain relevant over time, the law includes automatic inflation adjustments. This mechanism will help maintain the real value of the estate and gift tax exemptions in future years.

What This Means for Your Estate Plan

Here’s what individuals and families should consider:

Review Your Current Plan: If your estate plan was created when the exemption was much lower, it may need to be revised.
Rethink Gifting Strategies: With the potential higher annual exclusion and lifetime exemption, there may be new opportunities to make tax-efficient gifts during your lifetime.
Watch for Future Changes: Although the law is now enacted, future administrations could modify or repeal key provisions. Building flexibility into your estate plan can help you adapt as laws evolve. Staying in touch with us is key.

The newly enacted estate and gift tax law marks a significant shift in how wealth is taxed and transferred in the United States.

Now is the time to review your estate plan with an experienced estate planning attorney. Proactive updates today can help protect your legacy tomorrow, ensuring that your assets pass to your loved ones efficiently, securely, and in a tax-smart way.

If you, a friend, or a loved one needs help establishing or updating an estate plan, we’re here to help. Contact our Intake Department at 760-448-2220 or visit us online at www.geigerlawoffice.com/contact.cfm. We proudly serve families across California from our offices in Carlsbad (San Diego County) and Laguna Niguel (Orange County).