Federal Estate Tax Changes 2025: What Texans Must Know
In July 2025, Congress enacted legislation that permanently increased the federal estate and gift tax exemption. For Texans, this change marks one of the most significant shifts in wealth transfer planning in decades.
The exemption, once scheduled to expire at the end of 2025, will now remain at a historically high level, removing the uncertainty of prior law.
Still, high-net-worth families, ranchers, and business owners must carefully review their estate plans to maximize available benefits and ensure protection of family wealth.
The New Federal Estate and Gift Tax Exemption
Beginning January 1, 2026, the federal estate and gift tax exemption will be $15 million per person (or $30 million for married couples), indexed annually for inflation. This represents a permanent increase, eliminating the scheduled “sunset” that would have reduced the exemption by nearly half. Estates above the threshold remain subject to a 40 percent top federal estate tax rate.
The annual gift exclusion continues to provide opportunities for wealth transfer—$19,000 per recipient in 2025, with future increases tied to inflation.
It’s important to understand that, if your spouse is not an American citizen, you will not be allowed the unlimited marital deduction for purposes of the federal estate tax. You may, however, make an annual tax-free gift to a non-citizen spouse. The annual limit stands at $190,000 for 2025.
Why the Change Matters for Texans
Although the $15 million per person estate tax exemption is now permanent, Texans with significant estates must not assume that planning is unnecessary.
Large assets common in Texas—such as ranchland, oil and gas interests, and closely held companies—can easily exceed federal thresholds. Because Texas imposes no separate estate or inheritance tax, federal rules largely determine tax liability.
Even with a $15 million exemption, families may face liquidity challenges when a substantial portion of wealth is tied up in land or a privately held business. Without proper planning, heirs may be forced to sell valuable property to satisfy tax obligations.
Planning Opportunities Under the Permanent Exemption
The permanence of the higher exemption changes the focus of estate planning but does not reduce its importance. Texans should consider the following:
- Lifetime gifts – Making use of the full $15 million exemption strategically over time. You can gift up to $19,000 per person per year during your lifetime, but all lifetime gifts will be offset against the $15 million unified credit.
- Irrevocable trusts – With a trust, you can move appreciating assets outside the taxable estate while still preserving some degree of control.
- Family limited partnerships/LLCs – Attorneys and financial advisers can help you structure ownership to facilitate succession and potential valuation discounts.
- Charitable planning – An estate planning attorney can help you leverage donor-advised funds, charitable remainder trusts, or private foundations to align philanthropy with tax savings.
- Special provisions for business owners and ranchers – §2032A allows up to $1.42 million (2025 cap) in special-use valuation for qualifying real property, while §6166 permits deferral of estate taxes for closely held businesses with favorable interest rates.
Estate Planning Remains Essential
While the looming expiration of the federal estate and gift tax exemption has been lifted, estate planning remains essential for Texans with substantial assets. Effective estate planning is about more than tax minimization—it also ensures asset protection, smooth succession, and preservation of family legacies. Customized strategies, coordinated with legal and tax advisors, remain the key to safeguarding wealth for future generations.
Work with Experienced Texas Estate Planning Counsel
Navigating federal tax rules while protecting Texas family assets requires experienced counsel. A Texas estate planning lawyer can evaluate how the estate tax changes of 2025 affect your circumstances, recommend strategies, and implement tailored plans to protect wealth across generations.
Families, professionals, and business owners should act proactively to ensure their estate plans are structured to minimize exposure and preserve their legacy.
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Contact MCIS Law
At MCIS Law, PLLC, in Stafford, we provide comprehensive estate planning counsel to families, professionals, and business owners across southeast Texas. We handle all aspects of asset protection, trust creation, and succession planning, with a focus on adapting to the new federal estate tax exemption.
For a confidential consultation with an experienced Texas estate planning lawyer, email us or call our office at (346) 297-0121. We accept all major credit cards.
