High federal estate tax exemptions- $13.99 million per individual, $27.98 million per couple – may make estate tax feel like a distant concern or for most of us no concern at all. HOWEVER, estate planning can still save you and especially your heirs quite a bit of tax dollars. Under the current tax laws estate planning is really tax planning for your loved ones for when you pass on.
BUT, for business owners, tax planning is the real opportunity to protect and grow wealth right now for you and your family.
Key Tax Advantages for Business Owners
* Step-Up in Basis – On inheritance, the property cost basis resets to fair market value, significantly reducing future capital gains and restarting depreciation that creates larger tax deductions. Thus, gifting before death might not be the best plan.
* Expanded SALT Deduction – Schedule A – Deduct up to $40,000 in state and local taxes, but careful planning is necessary since the deduction decreases as income exceeds $250,000 single or $500,000 joint.
Business Focused Savings
* Section 199A Deduction remains in place for pass-through entities and don’t forget State PTET tax if it applies.
* The 1202 Qualified Small Business Stock exclusion increases to $15 million and has a shorted holding period – making “C” corporations newly attractive again.
* Future “Opportunity Zone Investments” Tax advantages return in 2027, rewarding proactive planning.
* Bonus Depreciation at 100% for depreciable assets purchased after January 19th, 2025.
Protect Your Business and Your Legacy
Even if your estate won’t trigger federal estate tax, strategic tax planning could deliver substantial lifetime tax savings and long-term growth for your family.
As always, seek the advice of your financial professionals before implementing any method on your own.