By Daniel B. Axman
We are writing to inform you of a change in the federal estate tax law that may have important implications for your estate plan. As many of you know, the federal gift and estate tax exemption and federal generation-skipping transfer (GST) tax exemption currently sits at $13.99 million per individual ($27.98 million per married couple). Prior to recent legislation, these exemptions were set to automatically decrease to approximately $7 million per person (plus an inflation adjustment) on January 1, 2026, due to the sunset provision under existing law.
However, on July 4, 2025, the President signed into law a bill that permanently increases these exemptions to $15 million per person (or $30 million per married couple), plus an inflation adjustment, effective as of January 1, 2026.
The federal gift, estate, and GST tax rates remain unchanged, with a top marginal rate of 40%. While prior legislative proposals targeted popular planning tools, such as grantor trusts and valuation discounts for closely held businesses, none of those changes were included in the final bill.
Planning Considerations
Although the urgency to use exemption before year-end has eased, we continue to recommend that high-net-worth individuals and families evaluate:
- Making additional lifetime gifts using the expanded exemption
- Opportunities to remove future appreciation from your taxable estate
- Succession planning for family businesses
- Reviewing existing trusts and estate plans for alignment with current goals
- Running updated estate tax projections in light of the new exemption levels
While the increase in the exemptions is described as “permanent,” no law is truly immune to future legislative changes. As such, we recommend that high-net-worth individuals and families continue to take a proactive approach to their estate planning.
Connecticut Residents
Tied to the federal exemption, Connecticut’s gift and estate tax exemption will likewise increase to $15 million per person on January 1, 2026. Connecticut residents should review the planning considerations noted above.
New York Residents
While the federal gift & estate tax exemption will increase, the New York estate tax exemption remains unchanged. The NY exemption is currently $7.16 million per person, indexed annually for inflation.
- For New York residents with estates approaching or exceeding the NY exemption, we encourage you to read our earlier client alert linked here.
- For those with estates above the federal threshold, we recommend you review your estate planning to ensure it addresses both federal and state-specific tax exposure.
We would be happy to review your current plan and discuss whether updates or new strategies are appropriate in light of this legislation.
If you have any questions or would like to schedule a consultation, please do not hesitate to contact us.
Contacts:
Daniel B. Axman | daxman@golenbock.com | (212) 907-7379
Donald A. Hamburg | dhamburg@golenbock.com | (212) 907-7380
Steven G. Chill | schill@golenbock.com | (212) 907-735
Hailey Dobin Reichel | hdobinreichel@golenbock.com | (212) 907-7312
ABOUT GOLENBOCK
Golenbock Eiseman Assor Bell & Peskoe LLP is a Manhattan-based business law firm with a broad-based practice that offers corporate, complex litigation, labor & employment, real estate, reorganization, intellectual property, tax, and trust & estate expertise. The firm provides high value, sophisticated counsel and representation for its domestic and international clients while maintaining a hands-on, personalized approach to all matters.
The firm represents entrepreneurial, portfolio, and institutional clients, ranging from start-ups to Fortune 500 companies, with a specific focus on the mid-market segment. Among our clients are private corporations, public companies, private equity firms, venture capital firms, individual investors, and entrepreneurs.
Golenbock is a member of the Alliott Global Alliance, which was named to Band 1 of global law firm alliances by Chambers Guides, the prestigious international legal survey. Alliott numbers 215 firms in 94 countries on six continents and helps member firms’ partner with others in countries around the globe.
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Golenbock uses Client Alerts to inform clients and other interested parties of noteworthy issues, decisions and legislation that may affect them or their businesses. A Client Alert should not be construed or relied upon as legal advice. This Client Alert may be considered advertising under applicable state laws.
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