How did the Tax Cuts and Jobs Act of 2017 affect the federal estate tax?
On January 2, 2013, the Congress passed and President Obama signed legislation that established the unified credit amount (i.e., the per-person exemption) at $5 million, indexed for inflation occurring after 2011. Thus, for instance, in 2017 the per-person exemption was $5.49 million. Using "portability," which was added to the estate tax laws in 2013, a married couple with minimal tax planning could have passed almost $11 million to the next generation free of estate tax. For those who practice law in this area, this increase was almost unthinkable.
"Hold my beer" President Trump might have said when he signed into law the Tax Cut and Jobs Act of 2017 ("TCJA"). One of the many provisions of this far-reaching legislation was to increase the unified credit amount (i.e., the per-person exemption) from $5 million to $10 million, indexed for inflation occurring after 2011. In 2025, the per-person exemption is almost $14 million. Thus, a married couple with minimal tax planning can pass almost $28 million to the next generation free of estate tax. However, unless the TCJA is extended or made permanent before January 1, 2026, the per-person exemption is scheduled to be reduced in half on January 1, 2026.