The new Congress and administration are negotiating in the form of a budget reconciliation bill, which only requires a majority vote in the Senate, to extend many provisions of the TCJA and make some permanent. In addition, President Trump has floated several new tax cut proposals such as not taxing overtime and tips. “Ultimately, the Republican tax reduction wish list is long, but each reduction must be offset with either new tax revenues in the same bill or an agreement to allow an additional amount of national debt to be incurred to pay for the reductions,” Byrnes said.
Some current tax reductions will be extended, but the price tag to extend them all is over
$3 trillion—so choices must be negotiated. “For example, extending or even making permanent the current income tax rates and tax brackets and allowing the state and local tax deduction to increase from $10,000 to an unlimited amount—as it was pre-TCJA—is far more relevant to Republican elections than extending or making permanent the doubling of the estate tax exclusion that TCJA allowed,” Byrnes said.
Byrnes noted that everyone needs an estate plan, no matter your net worth. However, high-wealth individuals who may need more nuanced planning should work with the appropriate professionals to ensure they have legal documents in place and that their estate plans are updated before the end of 2025 to potentially avoid high estate taxes.
If your net worth is less than $13.9 million in 2025, you currently don’t fit into the estate tax bracket. But you might when the threshold decreases in January 2026 to $7 million. Therefore, consider meeting with estate planning attorneys and financial advisors this year to make a plan to capture benefits under the TCJA and potentially avoid a 40% estate tax rate later.
High-wealth individuals may consider making gifts aligned with their values before the end of this year. “If you make a gift before January 2026, the amount of your exclusion is based on the date that you made the gift, meaning you can still take advantage of the increased exemptions offered through the TCJA,” Byrnes explained. “If you wait until 2026, you potentially face a 40% estate tax on gift amounts above the exclusion threshold that will have dropped to about $14 million per married couple.”
Each year, the IRS sets the annual gift tax exclusion, which allows a taxpayer to give a certain amount—in 2025, $19,000 per individual and $38,000 per married couple—per recipient tax-free without using up any of the taxpayer’s lifetime gift and estate tax exemption—in 2025, $13.99 million. “For example, if a married couple has three children and four grandchildren, they may transfer $266,000 in 2025 to their descendants without touching their combined $27.98 million gift tax exemption, thus allowing them to transfer further substantial assets gift tax-free,” Byrnes said. Not only are the assets removed from the taxpayers’ taxable estates, but the assets’ future appreciation also avoids gift and estate taxes.
Physical assets like a house or business can make great charitable gifts whether during or after your lifetime and allow the donor to bypass gains and receive tax deductions. When received by the Foundation, the asset will be sold, and the proceeds will go toward your passion at Texas A&M.
Financial advisors and estate planning attorneys can help tailor estate planning strategies through learning about your family, lifestyle and interests. Participating in a planning process helps you weigh your desire to provide estate gifts to family members and your favorite causes. Byrnes noted that a popular planning strategy involves combining personal and philanthropic goals in a specific way. “This could include making philanthropic gifts when loved ones reach a certain net worth threshold or leaving funds to them in a way that spaces out distributions over a period of time, like in a charitable remainder trust,” he said.
“Transfers for charitable purposes can generate substantial federal income and estate tax savings, and various techniques have been developed to maximize savings,” said Byrnes, who has personally endowed a scholarship through the Texas A&M Foundation to benefit graduate students in the Texas A&M School of Law’s risk and wealth management program. Every person’s financial situation is unique, but being able to fund the causes you care about at the place you love is sustainable here in Aggieland and will never sunset.
