{4 Minutes to Read} As a Trusts and Estates attorney, I frequently represent individuals preparing Wills, Trusts, and other estate planning documents (Power of Attorney, Healthcare Proxy, Living Will, Funeral Directives). These are incredibly personalized documents that ensure all of a client’s wishes are respected and carried out upon their eventual death. There is a lot that goes into planning, but one issue that often arises is the estate tax.
This is not the first time I have written an article about the estate tax. For example, in February 2017, I wrote an article titled “Estate Tax Basics.” In 2018, I wrote an update based on recent legislation that changed some terms, and a second update in March 2018.
In July of 2025, Congress established new exemption amounts for the federal estate tax. New York’s estate tax exemption amounts go up a little bit each year, so it’s important to stay on top of the changes if you have a taxable Estate. Who has a taxable Estate? Well, anyone who has assets that exceed the applicable exclusion amount (sometimes referred to by its former name, the unified credit). Your Executor will need to file an estate tax return shortly after your death, and depending on the information on that return, potentially pay taxes to the Federal Government or to New York State. As New Yorkers, we are subject to both the Federal and the New York State Estate Tax. There is a different applicable exclusion amount for each. Here is a helpful summary:
- Federal Estate Taxes
For purposes of the Federal Estate tax, the applicable exclusion amount has recently skyrocketed. In July 2025, Congress raised it from $13.99 million per individual to $15 million per individual starting January 1st, 2026. This number is indexed for inflation, so expect it to increase slightly each calendar year.
- New York State Estate Taxes
For purposes of the New York State Estate Tax, the exemption is much lower. For example, the exemption for people who died in calendar year 2025 was $7.16 million. In 2026, the Applicable Exclusion amount is $7.35 million.
This creates a disparity between Federal and New York State Estate taxes, meaning an Estate may exceed the New York State applicable exclusion amount and still be below the Federal exclusion amount, resulting in New York State tax liability without any Federal tax liability.
It’s important to talk to your Trusts and Estates attorney about estate tax liability if you find yourself either 1) over or 2) getting close to these numbers. A little bit of discussion and planning might allow you to reduce or even eliminate a state tax liability that your Estate might otherwise face.
While the vast majority (90% plus) of my clients do not have assets in excess of the New York applicable exclusion amounts (a couple might have more than that, but not individually), some people do. It’s important to address this to ensure the Estate pays the taxes on time and avoids interest and penalties.
For more information on this topic, please contact me.