On July 4th, President Trump signed new legislation that ensures many of the provisions of the Tax Cuts and Jobs Act of 2017 will not expire at the end of 2025 and will instead continue for the foreseeable future. Many of the tax law changes that took effect in 2017—changes to federal income tax brackets, an increased standard deduction, and an increase in the lifetime gift and estate tax exclusion—will remain in effect. This may provide high-net-worth individuals and families with the chance to take a step back and reconsider their estate plans now that much of the uncertainty surrounding these provisions has been cleared up.
Here are 3 things you may want to consider in light of the new legislation:
1. Gifting assets during your lifetime
In 2026, the lifetime gift and estate tax exclusion, which has more than doubled since 2017, is set to increase to $15 million for single filers and to $30 million for those who are married filing jointly (up from $13.99 million and $27.98 million in 2025, respectively). Going forward, the exclusion amount would be indexed for inflation.
While this may be welcome news for individuals and couples hoping to pass on their assets at death, it’s worth considering the potential benefits of gifting assets to your children or heirs during your lifetime, as well. Lifetime gifting offers the opportunity to take advantage of the current federal exemption amount immediately, which may be worth considering for high-basis assets that you wish to pass on but don’t expect to need to rely on the potential step-up in cost basis at death. Additionally, if you live in a state that has its own estate or inheritance tax, taking advantage of the federal gift and estate tax exemption during your lifetime may help lower the value of your estate at death and reduce the amount of taxes owed at the state level.
2. Bunching your charitable contributions
The standard deduction, which doubled in 2017, will increase to $15,750 for single filers and $31,500 for joint filers for the 2025 tax year. These amounts would be indexed for inflation after 2025.
Bunching several years’ worth of charitable deductions into a single year may provide you with the opportunity to itemize your deductions rather than claim the standard deduction. That way, you may be able to realize the tax benefits of some or all of those contributions, which would otherwise be superseded by the high standard deduction. This may be especially useful if you intend to take advantage of a Roth conversion. The additional deductions can help reduce the taxes associated with the conversion.
If you elect to pursue this strategy, you may want to consider establishing a donor-advised fund (DAF). When you contribute to a DAF, you are eligible for a tax deduction in the year you make the contribution, regardless of when the charities receive the funds. Furthermore, your heirs can be named as successor to the DAF, enabling them to continue your legacy of philanthropy indefinitely.
3. Revisiting your investment strategy and estate plan
With the potential for greater tax savings as a result of this legislation, this may be a good time to review your investment strategy and objectives of your overall financial plan. Would you use any additional assets to cover a short-term expense or purchase, or invest it in the hopes of getting closer to your goals—or maybe a little bit of both?
The passage of this new legislation is also a good opportunity to take a fresh look at your estate plan. Consider reviewing your core estate documents (such as a will, revocable trust, and power of attorney), as well as the beneficiaries on your life insurance or retirement plans, to determine whether any updates are necessary. If you’ve been waiting for more clarity regarding the tax law before taking a particular action, reach out to your estate planning attorney to see whether it may now be time to proceed.
Keep the future in mind
While many of the tax provisions explored here are being described as “permanent,” it’s important to remember that is a term of art particular to the process used to write them into law, and not necessarily a guarantee that they will remain in force forever. It simply means that the new legislation did not specify an end date for the provisions, as the Tax Cuts and Jobs Act of 2017 did. While it is likely that these provisions will be unchanged over the next few years, a future Congress and presidential administration could revisit them at some point in the future. With that in mind, it may be worthwhile to consult with your financial or tax professional before making any moves in order to best understand the implications your actions might have on your finances in the short term and the long term.