Estate-Gift Tax-Clean Energy-Benefit Plans
Estate and Gift Tax
The lifetime estate and gift tax exemption for 2025 deaths is $13,990,000. Next year, the federal exemption will rise to $15 million. And the OBBB makes this higher figure permanent, with annual increases to account for inflation. Although the federal estate tax exemption is high, watch out for state taxes
D.C. and 12 states levy their own estate taxes on decedents: These states are Conn., Hawaii, Ill., Maine, Md., Mass., Minn., N.Y., Ore., R.I., Vt. and Wash. The estate tax exemption amounts in the 13 locales vary widely from state to state. Only Conn. has hiked its estate exemption amount to nearly the current federal level. Five states now have inheritance taxes: Ky., Md., Neb., N.J. and Pa.
The annual federal gift tax exclusion for 2025 is $19,000 per donee. So you can give up to $19,000 to each child, grandchild or any other person without paying federal gift tax, tapping your lifetime estate and gift tax exemption, or filing a gift tax return. Annual gifts over the exclusion amount will trigger filing of a federal gift tax return on Form 709 for 2025, but you won’t owe any gift tax unless your total lifetime gifts exceed $13,990,000. And that’s a lot of gifts.
The OBBB didn’t change the annual gift tax exclusion. So for 2026, the amount will stay close to $19,000. It might be a bit higher because of inflation.
Clean Energy
Popular green-energy tax breaks are ending soon, thanks to the OBBB. The tax credit for buying a new or used electric vehicle ends after Sept. 30. More specifically, the credit isn’t allowed for any EV acquired after Sept. 30. For this purpose, an EV is acquired as of the date a written binding contract is entered into and a payment has been made, including a nominal down payment or a vehicle trade-in. Per IRS, if you have acquired the EV by Sept. 30, 2025, then you can claim the credit when you place the EV in service (e.g., take possession of it), even if you place the EV in service after Sept. 30. You can transfer the credit to the dealer at the time you take possession in order to lower the price of the EV.
Two tax credits for energy-efficient home improvements end after 2025. The 30% residential clean-energy credit is for people who install solar panels and the like in their homes. The energy-efficient home improvement credit is for homeowners who install smaller energy-saving upgrades, such as heat pumps, exterior doors and windows, central air-conditioning systems and boilers.
They are repealed for property placed in service after Dec. 31. Paying for the improvements before Jan. 1, 2026, is not enough to secure the credit. You will need to pay for them and get them completed before the end of this year.
Benefit Plans
Private equity is coming soon to 401(k) workplace retirement plans. President Trump issued an executive order that aims to allow 401(k)s to offer private equity, real estate, cryptocurrency and other alternative assets, in addition to the normal stocks, bonds, Treasuries, cash and money market funds. Following that order, the Dept. of Labor rescinded a 2021 supplemental statement that DOL says discouraged 401(k) fiduciaries from including alternative investments in their options for account participants. Consumer advocates and other critics are skeptical, pointing out the risk and complexity of these types of investments.