Effective January 1, 2026, the federal estate, gift, and GST tax exemptions were increased from $13,990,000 to $15,000,000, pursuant to the One Big Beautiful Bill Act. In addition to the exemptions being increased, they are scheduled to adjust annually for inflation. The federal estate, gift, and GST tax rates are currently 40%, each.
On March 25, 2026, a bill, Strengthen Social Security by Taxing Dynastic Wealth Act, was introduced into congress that, if enacted, would do the following:
- Increase the federal estate, gift, and GST tax rates to 45%.
- Reduce the federal estate tax and GST exemptions to $3,500,000.
- Reduce the lifetime gift tax exemption to $1,000,000.
- Combine the two Social Security trust funds – the Old Age and Survivors Fund and the Disability Insurance Fund – into a single trust fund.
- Deposit all of the revenues from the estate, gift, and GST taxes into the Social Security OASI/DI Trust Fund.
This is a reintroduction of a bill that was introduced in June 2019. This new bill is not anticipated by practitioners to make it successfully through the legislative process.
I recommend that you review your existing estate plan to make sure that it still meets your goals. Furthermore, many estate plans provide for distributions and the funding of trusts based on formula clauses, and it is important to review the ramifications of such formula clauses in light of the current exemptions.
For a detailed explanation of how the current law affect your current estate plan or to set up a meeting to review your current estate plan, you can call Esther A. Streete at 410-266-9909.
