The Latest Estate Tax Update Doesn’t Change Much, But Could Matter a Great Deal

Congress is moving to remove one of the biggest sources of estate planning uncertainty in recent years. A new tax-and-spending bill—already passed by the House and advanced by the Senate Finance Committee—would permanently allow individuals to pass on up to $15 million to their heirs tax-free (or $30 million for married couples). Compared to the current exemption of nearly $14 million, this might seem like a modest increase. The important change is that it eliminates the looming sunset provision that would have seen that threshold fall by roughly 50% at year-end.

That sounds like a big deal and it is, technically, but for most families, this is more of a clarification than a transformation.

Estate Taxes Are Rare, and Getting Rarer

Even before this bill, fewer than 1 in 1,000 estates paid federal estate tax. The exemption level has been generous since 2017, when it was temporarily doubled under the Tax Cuts and Jobs Act. The only real pressure came from the impending “cliff” at the end of 2025, when the exemption was scheduled to drop to about $7 million per person.

If this new bill becomes law, that cliff disappears. A wealthy individual dying in 2026 with $15 million would owe zero in estate tax instead of the $3.14 million they’d owe if the TCJA exemption was allowed to sunset. For couples with larger estates, the difference could mean millions in tax savings.

Again, this mostly affects the ultra-wealthy. The vast majority of Americans never come close to triggering estate taxes, and this bill doesn’t change that.

So... Does This Mean I Can Stop Thinking About Estate Planning?

Not at all. This is where semantics matter. At Hanover, we prefer the term Legacy Planning, because this isn’t just about avoiding taxes at death.

Legacy Planning means thinking strategically about:

The taxes your heirs will face when they inherit assets.

Inheriting a taxable IRA? They may need to draw it down in 10 years and pay income tax on every dollar.
Inheriting a house? Capital gains rules apply if they later sell it.

The taxes you face while living.

How you structure gifts, trusts, or account withdrawals in retirement can drastically affect your long-term tax burden.

How your wishes are carried out if you're incapacitated.

Powers of attorney, healthcare directives, and living wills are essential components of any legacy plan.

Your state’s own estate or inheritance tax rules.

Even if the federal exemption covers you, states like Oregon or Washington can still hit estates worth far less. (In Oregon, the threshold is just $1 million.)

What This Update Really Provides: Breathing Room

For families close to the previous exemption threshold, the new law removes the sense of urgency to make massive gifts before 2025. It offers a little more clarity, a little more predictability.

But it doesn’t remove the need to plan—especially because this isn’t necessarily the final word. A future Congress could lower the exemption again. Political winds shift, and tax policy shifts with them.

The Bottom Line

If you’re part of the small group that might cross the $15 million threshold, yes—this is good news. You have more flexibility now, and potentially less pressure to rush.

For everyone else, it’s a reminder that estate planning isn’t just about minimizing federal estate taxes. Legacy Planning is bigger than that. It’s about how you pass down wealth, when, and what kind of tax burden your family might face as a result, both during your lifetime and after.

Have questions about how this affects your planning, or what steps make sense for your family? Let’s talk.