By Katie Daff
The estate tax is a tax on assets an individual owns or controls at his or her death. The federal estate tax exclusion—the amount of an individual’s estate that is exempt from taxation—is currently at an all-time high of $13,990,000 per person or $27,980,000 for married couples, adjusted for inflation. Because the estate tax exclusion is so high, only a small percentage of estates are currently subject to federal estate tax, which has a maximum rate of 40 percent. There is no state level estate tax in Nevada.
The $13,990,000 lifetime exclusion per individual applies to gift and estate taxes combined. The IRS refers to this as a unified credit because it unifies both the gift tax and estate tax exclusions. Therefore, individuals can gift amounts up to the annual exclusion limit, currently $19,000 for 2025, to as many individuals as they wish without it affecting their lifetime gift and estate tax exclusion. However, any gift to an individual which exceeds $19,000 per year reduces the donor’s lifetime exclusion. Married couples can gift $38,000 to a recipient annually without reducing their lifetime exclusions. The gift tax exclusion amount for gifts to a non-citizen spouse is $190,000 annually. Generally, there is no tax on assets passing between U.S. citizen spouses.
The current estate tax exclusion amount, which was increased by President Trump’s 2017 Tax Cuts and Jobs Act, is set to sunset on December 31, 2025. Therefore, unless Congress acts before then, on January 1, 2026, the federal estate tax exclusion is expected to decrease to $5,490,000 per person, which is predicted to be around $7,000,000 when adjusted for inflation. This decrease in the federal estate tax exclusion would lead to a larger number of estates being subject to the federal estate tax.
However, there is a possibility that the estate tax exclusion could be abolished entirely. Republicans are pushing for the passage of the Death Tax Repeal Act (“Act”), which aims to eliminate the federal estate tax. The Act arrives as Republicans work to extend the 2017 Tax Cut and Jobs Act before it expires at the end of this year. The Act, if passed, would permanently eliminate the federal estate tax, thereby allowing individuals to pass an unlimited amount of assets free of tax after their death. The gift tax would remain in place to prevent high net worth individuals from transferring assets to family members tax-free during their lifetimes, although the gift tax exclusion amount could change from its current annual value of $19,000. Different versions of the Act attempting to repeal the estate tax have been presented since 2015 but have failed to become law.
Whether the current estate tax exclusion is extended, reduced, increased, or abolished remains to be seen. Given the uncertainty around tax laws, it is beneficial to review your estate plan periodically to mitigate potential estate tax liability.
About the author
Katie Daff is co-founder of Estate Law, Inc., where she focuses her practice on estate planning, probate, and trust administration.
About the article
This article was originally published in the Communiqué (May 2025), the official publication of the Clark County Bar Association. See https://clarkcountybar.org/about/member-benefits/communique-2025/communique-may-2025/. The printed magazine was mailed to CCBA members on April 30, 2025.
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