Big GOP Tax Bill Could Change Your Estate Planning for 2025

Many consider estate planning crucial, though recent political movements aren’t making it easy. The GOP’s latest proposal, called the “One Big Beautiful Bill Act,” includes a slew of tax provisions that could affect all Americans, including those with trusts and estates.

Enacted during Trump’s first term, the TCJA became the biggest change to tax law and policy in recent decades. Among its many provisions, the TCJA temporarily increased the estate and gift tax exemption while slashing the number of taxpayers subject to a “parallel tax system” known as the Alternative Minimum Tax (AMT).

At the time, the Tax Policy Center estimated that the number of taxpayers who would have paid AMT the year TCJA was enacted fell by almost 5 million people, while the number of filed estate tax returns diminished by about 3,500.

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But it hasn’t ended there. A U.S. House of Representatives GOP tax plan could make the new individual AMT thresholds permanent. Plus, the increased estate exemptions might be raised even higher under the new bill.

So, what does all this mean for estate tax planning? And should you make plans now for a potential tax policy change in the future? Here’s what you need to know as we head into an eventful tax year.

Proposed estate tax changes

Currently, the federal estate tax exemption kicks in for estates valued at more than $13.99 million for single filers and $27.98 million for married couples. Prior TCJA exemption limits were about half those amounts.

However, the higher estate tax exemptions in the TCJA expire at the end of this year. Some estimate that expiration without extension could lower the limits to just $7 million per individual.

Yet under the new proposed House GOP tax bill, the higher exemption amounts would not only be permanently extended, but also increased for 2026:

• Single filers could exempt $15 million from estate taxes.
• Married couples filing jointly might be exempt from $30 million in estate tax.

The Bipartisan Policy Center projects that estate taxes will account for less than 1% of all federal revenues in 2025. Estate tax collections in general tend to be a small part of overall federal revenue; so, will this “small” percentage be enough to make the higher estate tax exemption permanent?

Estate tax exemption in GOP bill

It’s no secret that House and U.S. Senate Republicans don’t see eye-to-eye on everything.

Proposals to increase the SALT cap, slash clean energy tax credits, and cut Medicaid benefits have caused some Senate backlash against the latest House bill. Despite all these proposed cuts to tax benefits, the bill is estimated to cost about $4 trillion, according to early estimates, raising concern among fiscal hawks in both chambers.

But by comparison, the estate tax exemption has received relatively little debate over its details.

Thus, with a GOP-controlled House and Senate, and Republicans generally in favor of raising or repealing the estate tax entirely, the higher estate tax exemption could face fewer challenges than other tax provisions in the House bill.

Plus, extending the raised estate tax exemption ($200 billion over ten years, according to the Institute on Taxation and Economic Policy) is less costly than other provisions in the bill. For instance, the cost of extending estate tax thresholds isn’t as high as the AMT provision (more on that below).

However, it’s important to note that the GOP tax plan is still in its early days. The bill will likely face many revisions before final legislation may be reached.

The Alternative Minimum Tax in 2025

Alternative Minimum Tax (AMT) places a floor on the amount higher-income taxpayers must pay, regardless of credits or deductions taken on their taxes.

AMT is only enacted when a taxpayer meets certain income limits, and even then, taxpayers may not be subject to the entire amount if they qualify for an exemption.

Under the TCJA, income limits and phase-outs for the AMT exemption were raised:

• Pre-TCJA, single filers could be subject to AMT when their income exceeded $54,300 (married filing jointly was $84,500).
• In 2025, taxpayers could be subject to AMT if their incomes exceeded $88,100 (single filers) or $137,000 (married filing joint couples).
• Pre-TCJA, single filers wouldn’t qualify for an AMT exemption if they had income of more than $120,700. The exemption limit for married filing joint couples was $160,900.
• In 2025, exemption limits are $626,350 (single) and $1,252,700 (married filing jointly).

The AMT income limit under the TCJA has dramatically lowered the number of people who qualify for AMT. Only 200,000 taxpayers were eligible for this tax system the year the law was enacted.

Plus, if a taxpayer qualifies for individual AMT, they generally pay less in taxes under the TCJA, due to the higher exemption phase-outs. According to the Tax Policy Center, almost $34 billion would’ve been paid if the TCJA hadn’t been enacted the year it took effect.

Shifting AMT to higher thresholds was big news for folks taxed on this “parallel tax scheme” for years, and even for some who only qualified for AMT occasionally. This has caused some to call for the AMT income limits and phase-outs to be made permanent.

Will the higher ‘AMT tax’ be made permanent?

Under the House GOP tax proposal, AMT increased thresholds and phase-out limits would be permanent.

This means fewer taxpayers would continue to be subject to AMT, potentially leaving more money for higher-income individuals to give to their heirs.

However, as mentioned, the cost of permanently raising the AMT threshold is high compared to the estate tax exemption:

• According to the Center on Budget and Policy Priorities, extending (without increasing) an estate tax exemption would cost $200 billion over ten years. Previous estimates of eliminating the estate tax have suggested a cost of $370 billion over ten years, as reported by Kiplinger.
• By comparison, the Bipartisan Policy Center estimates that extending the higher AMT thresholds would cost $1.4 trillion over ten years.

So, while Republicans generally favor extending the AMT provision, permanently raising the threshold might face challenges as the tax bill moves through Congress. That’s especially true since some Senate Republicans are calling for a reduction in the nearly $4 trillion estimated cost of the House plan.

Estate planning considerations under the new tax bill

How can you and your heirs respond to an ever-changing tax policy landscape?

Well, if higher estate tax exemptions and AMT thresholds do become permanent, here are a few key items you might consider in your estate planning:

• Higher estate exemption amounts could mean more money for your heirs, through either inheritance or gifts made throughout your lifetime. However, raising the current exemption limits might make gifting less critical.
• Instead, maintaining wealth under a higher exemption amount could offer heirs savings on capital gains tax if they plan on selling part of the estate, like certain investments (for more information, see Kiplinger’s report, How the Basis Step-Up Rule Works).
• Also, strategies that focus on “tax avoidance” through trusts or gifting assets might become less urgent under raised estate exemption amounts than those centered on wealth preservation.

The last bullet is particularly true regarding AMT. While the House tax bill would make the individual AMT thresholds permanent, estates and trust AMT would still be subject to lower income and exemption amounts.

Consequently, the GOP tax proposal may not particularly affect your AMT planning. But be sure to consult your tax professional regarding your estate plan.

Note: When determining an estate plan, other factors like the type of estate, costs associated with running the estate, and whether the gifted asset will be later sold, should also be considered. You may want to consult with your financial advisor on creating an inheritance plan for various potential outcomes of future legislation.

Keep in mind state estate tax rules

You may also consider how state law can impact your estate tax planning. Several states have their own estate and inheritance taxes, and some can have quite low estate thresholds.

For example, Nebraska imposes an inheritance tax on adult children when their inheritances exceed only $100,000. And in Kentucky, nephews and nieces only receive a $1,000 exemption.

If you live in a state that taxes your heirs, especially one where estate exemptions are low, you might want to consider relocating to a state with more favorable estate taxes should the federal exemptions remain high.

Of course, not everyone may be able to relocate, and there are other factors to consider, like the average cost of living in the new state, local income and property tax rates, and how important your current home is to you and your family.

When in doubt, consult with an estate planning professional to adjust your family’s plans in response to changes on Capitol Hill. Stay informed of legislative actions. And talk to family members to ensure maximum wealth preservation as we continue through an ever-changing tax policy landscape.

Read More

• The 2025 Estate Tax Exemption
• States That Won't Tax Your Death
• What is the Gift Tax Exclusion for 2025?