Planning for what happens after you’re gone isn’t something anyone looks forward to, but it’s one of the most important steps you can take to protect your loved ones and your legacy. A component of this planning is understanding estate taxes and the potential impact of upcoming elections on estate tax laws. As the November ballot approaches, here’s what you need to know—and why it matters.

What Is Estate Tax?

The federal estate tax is a 40% levy on estates that exceed a certain value, currently set at $13.61 million per individual in 2024. For couples, that threshold is $27.22 million. Some states impose their own estate taxes, although California does not currently have one.

However, federal law is set to change on January 1, 2026, so that the estate tax will automatically reset (or sunset) to $5 million per individual, indexed for inflation (to actually be approximately $7 million per individual), unless Congress and the President act prior to then.  Whether and how much of a change we actually see could be influenced by which political party wins the 2024 election.

Election Implications: Democrats vs Republicans

The estate tax debate often mirrors political party lines. Here’s how each candidate’s win could impact estate tax policy:

• If Kamala Harris wins: There’s a strong chance she may push for lowering the estate tax exemption further, perhaps bringing it down to $3.5 million per individual ($7 million per couple), back to the threshold in 2009.  This would broaden the scope, taxing more estates. This shift, however, could also help fund public programs by ensuring that wealthy individuals contribute more in taxes. Many argue that the current exemption is so high that only the ultra-wealthy are taxed—and they often find ways to avoid taxes through legal loopholes. A lower threshold would tax “regular rich” individuals, while still protecting the middle class from estate taxation.
• If Donald Trump wins: Trump’s previous tax cuts favored the wealthy, and a second term could see him attempt to preserve or even raise the current exemption to keep more estates untaxed. His administration previously doubled the exemption, and he may aim to prevent the scheduled reduction in 2026. This would likely maintain the status quo, with estate taxes affecting only the wealthiest, who often have the resources to minimize their tax exposure through careful estate planning.

Why a Lower Threshold Could Benefit More Americans

The current estate tax threshold is so high that only a small fraction of Americans—primarily the ultra-rich—pay any estate tax. Many of these individuals use complex legal strategies to reduce their taxable estates, meaning even fewer dollars flow back into public coffers.

Lowering the threshold to include more “regular rich” estates—people with significant wealth but not billionaires—could:

• Generate additional tax revenue to fund infrastructure, healthcare, and education, benefiting all Americans.
• Encourage more equitable wealth distribution by ensuring that the wealthiest contribute a fairer share to society.
• Still protect the middle class, as the lowered threshold would likely continue to exclude most Americans from estate taxes.

That said, proactive estate planning remains important to protect your family’s wealth, particularly for those whose estates may now fall within a taxable range under future laws.

What You Can Do

With potential changes on the horizon, it’s wise to take action now:

• Review your estate plan: Ensure it reflects current laws and is flexible enough to adapt to future changes.
• Consider gifting now: With the exemption currently at a historically high level, now might be the time to transfer wealth to your heirs.
• Portability: Ensure that if you’re married, the surviving spouse can use any unused portion of the deceased spouse’s exemption.
• Stay informed: Election results can trigger swift changes in estate tax laws, so being aware and proactive is key.

At Widlast Legal, we understand the complexities of estate tax planning and the challenges of preparing for potential legal changes. If you haven’t reviewed your estate plan recently or want to understand how the upcoming election might affect your family’s future, contact us today. We’re here to help safeguard your legacy.

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President Kamala Harris announced her endorsement of the estate tax provisions contained in the American Housing and Economic Mobility Act of 2024.

The Tax Cuts and Jobs Act was passed by Congress and signed into law by former President Donald Trump in December 2017.