2025 Federal Budget Impact on Estate Planning

Recent changes in federal law have made some changes and updates that could affect your estate planning.  Understanding these changes can help you make smart decisions to safeguard your family and legacy.

Here are three key areas where the law has changed and what they mean for your estate planning.

Changes to Federal Estate Tax: Increased Exemptions

The federal estate and gift tax exemption has been permanently increased to $15 million per person (or $30 million for married couples). This means that estates below these amounts won’t owe federal estate taxes when assets are passed on.

What this means and doesn’t mean:

• Many wealthy individuals and couples will no longer need complex tax strategies to avoid federal estate taxes.
  

• Keep in mind that Illinois has its own estate tax with a lower exemption of $4 million, so state-level planning remains important. In Illinois, there is also no “portability” meaning if you are married, this exemption does not increase to $8 million.
  

Changes to Charitable Giving Rules

Starting in 2026, there are two important changes to how charitable donations are treated for tax purposes:

• Individuals who do not itemize their taxes can now deduct up to $1,000 (or $2,000 for married couples) in cash donations to qualified charities.
  

• For those who do itemize, charitable deductions will only apply to amounts that exceed 0.5% of income, and deductions are capped at 35% of income, down from the previous 37%.
  

How this impacts your estate planning:

• Smaller, regular donations may provide tax benefits even if you don’t itemize.
  

• If you plan to leave gifts to charity through your will or trust, it’s wise to review how your plan aligns with these changes.  Consider working with your attorney to update charitable giving strategies such as donor-advised funds or charitable trusts.
  

SALT Deduction Changes: Temporary Increase

The State and Local Tax (SALT) deduction cap has been temporarily increased from $10,000 to $40,000 for married couples (and $20,000 for individuals) through 2029.

What this means for you:

• If you pay high state and local taxes, including property taxes, you may now deduct more on your federal return.
  

• This could improve your cash flow, making it easier to fund trusts, pay for insurance, set up 529 savings plans, increase retirement account contributions, or make gifts to family members.
  

Since this is a temporary increase, it’s a good time to plan ahead to take full advantage before the cap returns to $10,000.

Plan Today for Tomorrow

Estate planning is not just for the wealthy, it's about protecting your family, making your wishes known, and giving your loved ones peace of mind. With these new changes in federal law, it's a smart time to review your will, trust, and overall plan to make sure they still meet your needs. 

And if you haven’t made any plans yet, it’s a great time to get started!

If you’d like help navigating these changes and crafting an estate plan that reflects your life and your values, I’m here to help. Let’s make it simple and personal—because your family deserves clarity, not confusion.

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