For most clients under that $30 million combined mark, the federal estate tax just moved off the top of the priority list. It's also created a problem that I don't think the planning community has fully caught up to yet: once estate tax risk recedes, income tax becomes the thing fundamentally eroding wealth over time.
For most clients under that $30 million combined mark, the federal estate tax just moved off the top of the priority list.
Run the 9% gross versus 2.5% net-of-tax out over 20 years, and you're not talking about a rounding error in a financial model.
It's also created a problem that I don't think the planning community has fully caught up to yet: once estate tax risk recedes, income tax becomes the thing fundamentally eroding wealth over time.
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For most clients under that $30 million combined mark, the federal estate tax just moved off the top of the priority list. It's also created a problem that I don't think the planning community has fully caught up to yet: once estate tax risk recedes, income tax becomes the thing fundamentally eroding wealth over time. Layer in federal income tax, Obamacare tax, state local tax and the lack of deductibility of miscellaneous itemized deductions, and that 9% becomes closer to 2.5%.
Act (OBBBA) made the increase permanent, setting the federal estate and gift tax exemption at $15 million per individual ($30 million per married couple) starting January 1, 2026, with no sunset date and built-in inflation adjustments. Income tax doesn't wait for a legislative deadline. At a 37% top rate, which rises to approximately 55% when taking into consideration state, local and ancillary taxes in certain jurisdictions, it takes its cut of every dollar of ordinary income and short-term gain, every single year, indefinitely.
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