Biden Administration Could Reduce Estate Tax Exclusion

The estate tax exclusion is the amount you can give without facing an estate tax. Under current law, you may give this amount during life or at your death and after that amount is used, you face a federal tax of 40% on assets beyond that amount. The amount has fluctuated a great deal over the years. It was $675,000 as recently as 2001. In 2021, the exclusion is a whopping $11.7 million per person. This exclusion consists of a “permanent” exclusion of $5 million, adjusted for inflation since a 2011 base year, and then temporaril doubled through 2025 as a result of a 2017 law. So, unless Congress acts to extend the doubled exclusion, it will revert to $5 million adjusted for inflation beginning in 2026. Confusing, isn’t it?

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