Big Changes to the Federal Estate Tax are Coming: What You Need to Know

If you’ve never thought about the federal estate tax before, you’re not alone. But the July 2025 budget bill will have a big impact on many families—especially those with a high net worth, a successful business, or valuable real estate.

Let’s break it down in plain English so you can understand what’s changing and how it might affect you or your loved ones.

What Is the Federal Estate Tax?

The federal estate tax is a tax on the transfer of property when someone dies. It applies only to the value of an estate that exceeds a certain exemption amount (i.e., "the applicable exclusion amount") set by the federal government. In simple terms, it’s a tax on what you leave behind when you pass away—but only on the assets in excess of the applicable exclusion amount. ____________________________________________________

Indiana does not have an estate tax.

The state inheritance

tax was repealed in 2013.

____________________________________________________

This year the applicable exclusion amount is so high—nearly $14 million per person—that most families don’t have to worry about it. But prior to the new budget bill, that high exemption was set to drop drastically in 2026, potentially pulling many more families into the estate tax world.

What Was Going to Happen in 2026?

Under The Tax Cuts and Jobs Act of 2017, the estate tax exemption was scheduled to be cut in half on January 1, 2026. That would’ve dropped the amount you could pass estate tax-free from nearly $14 million to about $7 million per person.

What Did the New Law Change?

The new legislation prevents that rollback. Starting January 1, 2026, the federal estate tax exemption will be increased to $15 million per person, indexed for inflation in future years. For married couples, that means up to $30 million can be passed on to heirs without paying any federal estate tax.

What Does This Mean for You?

Here’s the good news: if your estate is under $15 million if you're single or $30 million if you're a married couple, your estate likely won't owe any federal estate tax. (An exception would be if you made large non-charitable gifts during your lifetime which may have reduced the amount you can transfer free of estate tax at your death.)

But estate planning isn’t just about taxes. It’s also about making sure:

• Your wishes are carried out after you pass away,

• Your family avoids unnecessary court involvement, and

• You protect what you’ve worked so hard to build.

Should You Update Your Estate Plan?

If you haven’t looked at your Will or Trust in a few years—or if you haven't yet created one—this is a great time to take action. You may benefit from:

• Updating outdated documents

• Taking advantage of the increased exemption

• Putting protections in place for your spouse, children, or beneficiaries

We’re Here to Help

At Troyer & Good, PC, we help individuals and families with estates of all sizes understand and take advantage of many areas of the law to protect their assets and plan for the future. Whether your estate is $150,000 or $15 million, we’re here to help you define your legacy.

If you have questions about how the estate tax law affects you—or if you want to make sure your current plan is still working as intended—schedule a consultation on-line or give us a call at 260-440-3241. We’re here to help you take the next right step for your loved ones.