Vice President Kamala Harris released her economic agenda, giving some general insight into her tax priorities, with a promise of more details to come in the weeks ahead. She included a plan to lower housing costs that would be funded with increased tax revenue from changes to the estate and transfer tax rules.

Estate plans should be reviewed now, because current estate tax strategies provide more opportunity to plan than what may be available under Harris’ proposals, and under current rules once the Tax Cuts and Jobs Act expires on 12/31/2025.

  • Estate Tax Changes:
  • Current lifetime estate tax exemption of $13,610,000 per person (for 2024) with a 40% tax rate will decrease to $5,000,000 per person (plus inflation indexing) on January 1, 2026, once the Tax Cuts and Jobs Act expires.
  • Harris proposes further reducing the lifetime estate tax exemption to $3,500,000 per person.
  • Proposed increase in estate tax rates to 55%, 60%, and 65%.
  • Introduction of a 10% surtax on estates valued over $1 billion.
  • Gift Tax Changes:
  • Current annual gift exclusion allows individuals to gift up to $18,000 per recipient without affecting the donor’s lifetime estate tax exemption.
  • Harris proposes reducing the annual gift exclusion to a total of $10,000, regardless of the number of recipients.
  • Estate Planning Tools at Risk:
  • Proposed restrictions or elimination of certain estate tax planning tools, such as irrevocable grantor trusts.
  • Potential limitations on valuation discounts for gifted assets like securities, leading to higher appraised values and more significant impacts on the donor’s lifetime estate tax exclusion.

In addition to estate tax, Harris has also touched on income tax and a cost-of-living plan that is outlined below.

  • Corporate Tax Changes:
  • Increase in the corporate tax rate from 21% to 28%.
  • Individual Income Tax Changes:
  • Commitment to not raise taxes on individuals earning less than $400,000 annually.
  • Proposed increase in the top individual income tax rate from 37% to 39.6%.
  • Introduction of a “wealth tax” of 25% on unrealized capital gains for billionaires.
  • Additional Proposals:
  • Cost-of-living plan focusing on reducing housing and grocery costs.
  • $25,000 credit for first-time homebuyers.
  • Federal ban on price gouging in food.
  • Exemption of tip income from federal income taxes.
  • Increase in the federal minimum wage.

While many of these proposals have been more general than detailed, they give a good indication of where the Harris economic agenda is headed. Reach out a Buckley Fine attorney today to review your estate plan and utilize opportunities that are available now.