Crucial Updates to Estate Tax Exemptions and the Corporate Transparency Act in 2025 - Trusts & Estates and Elder Law Newsletter
By: Alec R. Borenstein
Federal Estate Tax Exemption Update
The federal estate tax exemption has increased from $13.61 million in 2024 to $13.99 million in 2025. Accordingly, married couples can utilize a total exemption of $27.98 million to shield their assets from federal estate taxes. Due to the increased exemption amount, even married couples who have already used up their exemptions will receive another $760,000 to gift in 2025.
As before, estates valued above the exemption threshold may be subject to federal estate taxes, with rates reaching forty (40%) percent.
New York State Estate Tax Exemption Update
New York State has its own estate tax with a significantly lower exemption threshold than the federal level. For 2025, the New York State estate tax exemption is $7.16 million (increased from $6.94 million in 2024). Additionally, the "estate tax cliff" remains in effect, which can result in the loss of the entire exemption if the estate exceeds the exemption amount by 5% or more.
Increased Annual Gift Tax Exclusion
The annual gift tax exclusion has risen to $19,000 per donee for 2025, which is an increase from $18,000 in 2024. The annual exclusion allows individuals to make tax-free gifts up to the exclusion amount each year without affecting their lifetime exemptions.
Corporate Transparency Act
If you have been following the changes to the Corporate Transparency Act (CTA) this year, you would be forgiven for being completely confused by where it stands. As a recap, the CTA is a federal law that went into effect on January 1, 2024, that mandates most businesses operating in the United States to reveal their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). There had been various legal challenges to the CTA throughout 2024, which delayed enforcement of the CTA. On December 26, 2024, the U.S. Court of Appeals for the Fifth Circuit paused enforcement of the CTA, which reversed an earlier decision from December 23, 2024, that reinstated the CTA. On December 31, 2024, the Department of Justice asked the Supreme Court to halt the injunction pending a final decision by the Fifth Circuit. On January 23, 2025, the United States Supreme Court agreed with the Department of Justice and issued a stay of the nationwide injunction, pending the Fifth Circuit’s decision. However, the Supreme Court did not issue any decisions as to the constitutionality of the CTA. On March 2, 2025, the Treasury Department announced that they will not be enforcing any fines for US citizens or Domestic Reporting Agencies who do not comply with the CTA, and so it seems, after all the drama from last year, the CTA is not an issue for US citizens, at least during the current Administration.
Stay Informed
As of now, the increase in the federal estate tax exemption is still scheduled to sunset in 2026. This would lower the federal exemption to $5 million indexed for inflation (most estate planners believe the exemption will be closer to $7 million). However, with a new presidential administration set to begin, there will undoubtedly be significant changes in the world of Estate Planning in 2025. If you have questions about any of these changes and the impact on your own estate planning, be sure to reach out to the Trust & Estate attorneys at Pashman Stein Walder Hayden P.C.
Learn more about our Trust & Estates and Elder Law & Special Needs Planning Practices.
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The information contained herein is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to these materials do not create an attorney-client relationship between Pashman Stein Walder Hayden P.C. and/or its attorneys, and the reader of the materials.