Estate taxes are the federal tax on transferring your wealth to heirs after you die. Not everyone pays them; only very large estates are taxed but understanding how they work can help you take control of your future and protect your family’s legacy. As of 2025, the federal estate tax exemption is $13.99 million for individuals and $27.98 million for married couples.1 Estate taxes can change, however; so, even if you may not qualify now for a federal estate tax, it’s important to plan ahead and review your current estate strategy.
We'll dive into a brief history of estate taxes and discuss how planning ahead is crucial to ensuring your assets are distributed according to your wishes and your loved ones are taken care of.
Estate Tax Milestones in American History
Historically, U.S. estate taxes have come and gone, often tied to wars or big shifts in tax policies. Today, these taxes account for about 1% of federal revenue.2
Treasury.gov, August 12, 2025
Below is a quick timeline of key estate tax milestones in American history:
- 1797 - 1864: The first federal estate tax (a "stamp" tax on wills) raised money for the Navy during an undeclared war with France, which had begun in 1794. When the crisis
ended in 1802, the tax was repealed.1
- 1862 - 1864: Estate taxes returned during the build-up to the Civil War. The Revenue Act of 1862 included an inheritance tax, which applied to transfers of personal assets. In 1864, Congress amended the Revenue Act, added a tax on transfers of real estate, and increased the rates for inheritance taxes. As before, once the war ended, the Act was repealed.1
- 1898 - 1902: A short-lived federal legacy tax was proposed to raise revenue for the Spanish-American War. This served as a precursor to modern estate taxes. It instituted tax rates that were graduated by the size of the estate. The end of the war came in 1902, and the tax was repealed later that same year.1
- 1916: The Revenue Act of 1916, a modern federal estate tax was created (after the 16th Amendment to the Constitution was ratified in 1913). It has been a regular part of the tax code ever since.1
- 2010: For a brief time, the estate tax was repealed, but Congress passed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The new law retroactively imposed tax legislation on all estates settled in 2010.3
- 2012: The American Tax Relief Act made the estate tax a permanent part of the tax code.3
- 2017 - 2015: As part of the 2017 Tax Cuts and Jobs Act, estate tax rules were adjusted again. In 2018, the estate tax jumped up to $11.8 million, doubling the $5.6 million that had previously existed. Married couples were able to pass as much as $22.4 million to their heirs.4 Inflation increases have since raised to $13.99 million per person and $27.98 million for married couples in 2025.4
Estate Tax Exemptions Over Time
| Year |
Exclusion Amount |
Highest Tax Rate
|
| 2013 |
$5,250,000
|
40% |
| 2014 |
$5,340,000
|
40% |
| 2015 |
$5,430,000
|
40% |
| 2016 |
$5,450,000
|
40% |
| 2017 |
$5,490,000
|
40% |
| 2018 |
$11,180,000
|
40% |
| 2019 |
$11,400,000
|
40% |
| 2020 |
$11,580,000
|
40% |
| 2021 |
$11,700,000
|
40% |
| 2022 |
$12,060,000
|
40% |
| 2023 |
$12,920,000
|
40% |
| 2024 |
$13,610,000
|
40% |
| 2025 |
$13,990,000
|
40% |
IRS.gov, 2024
As the chart above shows, the estate tax exemption has grown dramatically. The jump in 2018 is especially visible, due to Congress doubling the exemption amount from 2017. The exemption amount is important, because if your estate (after deductions) is below the exclusion amount, you will not have to pay a federal estate tax. Only estates above the exemption have to pay the tax on the amount over the threshold.
Why Estate Taxes Matter to You
You might wonder: "I'm not a multimillionaire; do I need to worry about estate taxes?" In most cases, the answer is that only large estates are taxed. However, estate planning is still important for everything. Here's why:
- Safeguard your family's inheritance: If your assets exceed the exemption (now or in the future), federal estate taxes could significantly reduce what your heirs receive. For example, without proper planning, a $1 million tax bill could cut into the family home or savings.
- Minimize surprises: Estate laws and exemptions can and do change. By staying informed and planning now, you can minimize or avoid unexpected tax bills for your estate or heirs.
- Reduce Probate and fees: Even if your estate doesn't qualify for an estate tax, having an actionable plan (including wills and trusts) helps to avoid other costs and delays. A well-thought-out plan can reduce taxes and legal fees, saving your family's time, money, and stress.
- State considerations: Remember that while California does not have a state estate tax, some other states do. Even if you don't owe federal taxes, be sure to check state rules if you move or own property in another state.
Secure Your Financial Future with an Estate Plan
Regardless of your estate's size, these steps can help you and your family plan out a well-rounded estate plan.
- Take stock of assets: List and value all your properties, investments, retirement accounts, insurance policies, and personal belongings. Knowing the value of your estate helps determine if you might face estate taxes now or in the future.
- Write or update your will and trusts: A will manages asset distribution, assigns guardians for minors, and selects an executor. You might also consider trusts for added protection to bypass probate, manage assets, and address special circumstances.
- Designate beneficiaries and powers of attorney: Make sure all your accounts have up-to-date beneficiary designations. Also, assign a power of attorney and healthcare proxy so someone you trust can act for you if you become unable.
- Stay organized and communicate your wishes: Keep all estate documents in one secure place. Discuss your plan with family members or executors and share your wishes so they can carry out the plan as seamlessly as possible.
- Stay informed: Estate tax laws change with new legislation or inflation adjustments. Plan to review your estate every few years or after major life events.
How Logix Can Help Your Estate Planning
Logix Financial Services offers access to experienced financial consultants who can discuss estate and legacy planning and guide you towards financial confidence. They can explain how estate taxes might affect you and recommend strategies like trusts or gifting. Our advisors can create a personalized estate plan that fits your family's needs.
We also offer many estate planning educational resources and seminars, like an Estate Management Checklist to help you organize your wills and important documents.
Remember, proactive estate planning protects your loved ones and can reduce estate taxes and avoid length probate.
1. IRS.gov,2025
2. Treasury.gov, August 12, 2025
3. Congress.gov, 2025
4. Investopedia.com, February 10, 2025
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.