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Several legal and political changes have taken place between 2024 and 2025 that savvy individuals should be prepared for. These changes will affect not only your estate planning, retirement planning and business planning, but also your individual and family taxes. The impact of these changes may require you to review and update your existing plans and strategies.
Estate and Gift Tax Exemption Amounts in 2025
If an individual passes away during calendar year 2025, they can pass $13.99 million dollars tax free to their heirs (the “unified credit” or lifetime exemption amount). They can also use up all, or a portion, of this amount to make tax-free gifts while alive in 2025. This number is up from $13.6 million dollars in 2024, and the highest exemption amount since the one-year, unlimited exemption in 2010 (Taco Bell founder Glen Bell, Yankees owner George Steinbrenner and several other billionaires who passed in 2010 thank the US taxpayers for their generosity).
Furthermore, an individual may make a fully tax-free and non-reportable gift of up to $19,000 per individual recipient in 2025, up from $18,000 in 2024.
Future Changes to Tax Laws on the ‘Sunset’ Horizon
However, the provisions of the 2017 law establishing these numbers (the “TCJA”) is scheduled to “sunset” at the end of 2025, and the 2026 unified credit is expected to drop to approximately $7 million dollars. Additionally, the sunset will also result in changes to other tax rules currently in place, including:
- An increase in certain marginal income tax rates (e.g. top rate up from 37% to 39.6%)
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A 50% reduction in the Standard Deduction amount for individual taxpayers (thus more individuals will go back to itemizing deductions)
- The expiration of the Child Tax Credit increase (currently $2,000 per child, back down to $1,000 per child)
- The elimination of the “cap” on deductions for State and Local Taxes (currently capped at $10,000.00).
It is unclear at this moment if Congress will pass an extension of the TCJA, or what it may look like. Both the Senate and House of Representatives are currently in negotiations on the 2025 budget and tax law updates.
Reporting Requirements under the Corporate Transparency Act Eliminated
Another major change for 2025 is the almost complete reversal of the reporting requirements of the Corporate Transparency Act. On March 2, the United States Treasury Department announced that no penalties or fines will be imposed with regards to the beneficial ownership reporting rules.
The Treasury Department also stated that they anticipated issuing new rules that will narrow the scope of the Corporate Transparency Act to foreign reporting companies only. This is a substantial change which follows both numerous lawsuits challenging the constitutionality of certain reporting requirements of the Corporate Transparency Act, as well as the change in the makeup of the Executive and Legislative branches following the November, 2024 election.
Let this be a clear example of how quickly the political and regulatory landscape can pivot and reshape what businesses and advisors must prepare for. In this case, a sweeping federal requirement was effectively paused and redefined in just a few short months, reminding us that staying informed and adaptable is at the heart of sound planning.
Important Tax Decisions Affecting 2025 and Beyond
A number of cases were resolved in 2024 which affect tax planning and policy in 2025.
The use of intra-family loans was addressed in a recent ruling. A mother made “loans” to her children, with the plan to forgive each child’s debt on an annual basis in the amount of the gift tax exclusion. There were no written loan agreements, no efforts to collect any money from the children, and no security behind the loans. The court ruled that the mother’s “loans” to at least one of her sons were actually gifts, and became gifts when she realized the son could never repay them because of his lack of assets.[1]
Also in 2024, the California Supreme Court ruled that real property owned by a corporation, and transferred to a revocable living trust, was subject to reassessment of property tax because the proportional ownership interests were not equal, and thus constituted a change in ownership. The case hinged on the fact that, while the voting share ownership between the corporation and the trust were equal, the non-voting shareholders were not beneficiaries of the Trust.[2]
Yet another decision relates to business succession planning, in particular buy-sell agreements for closely held companies. This case involved brothers who co-owned a company and had entered into a Buy-Sell Agreement utilizing life insurance policies payable to the corporation. The United States Supreme Court found that, under the facts presented, the life insurance payout functioned to increase the value of the corporation by the amount it received in life insurance proceeds, even though those proceeds were used to fund a buy-out.[3]
These cases are a good reminder of the importance of engaging in thoughtful planning and following proper procedures to ensure maximum tax benefits, and the pitfalls which may occur.
In Times of Change, Proactive Planning is Essential
Taken together, the sweeping tax law changes, dramatic policy reversals like the Corporate Transparency Act rollback, and key court rulings from 2024 paint a clear picture: the legal and financial landscape is in flux, and proactive planning is more important than ever. Whether it’s preparing for the possible sunset of major tax provisions, navigating shifts in reporting obligations, or structuring transactions with precision to withstand legal scrutiny, individuals, families, and business owners should view 2025 as a critical time to review and realign their strategies. In a world where regulations can shift overnight, staying informed, attentive to detail, and guided by experienced counsel remains at the core of effective long-term planning.
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