The 2025 tax law settled questions that hung over high-net-worth families for years. That is exactly why the months before December 31 deserve a fresh look. Many estate plans, gifting strategies, and business structures were built around a federal exemption that was scheduled to fall by roughly half at the end of 2025. That cut is no longer coming. Plans designed for it may now be pointed at the wrong target.
Here is what families and business owners in Tennessee and Illinois should review while there is still time to act this year.
The federal estate and gift picture is now stable
The One Big Beautiful Bill Act, signed in July 2025, set the federal estate, gift, and generation-skipping transfer tax exemption at $15 million per person, or $30 million for a married couple, beginning January 1, 2026. The amount is indexed for inflation starting in 2027, and the top rate stays at 40 percent. Congress removed the sunset that would have rolled the exemption back, so there is no year-end cliff this time.
For most families, that removes the pressure to rush large gifts before December 31. It does not remove the reason to review. If your documents were drafted to capture an exemption that was about to disappear, they may now move more wealth than you intend, or produce results you would not choose if you started fresh today. A plan that made sense under the old rules is worth a second read under the new ones.
The annual gift exclusion remains $19,000 per recipient for 2026, or $38,000 for a married couple who split gifts. Gifts at that level reset every January 1, so the 2026 window is its own use-it-or-lose-it opportunity. Families funding education can also front-load five years of annual exclusion gifts into a 529 plan, up to $95,000 per beneficiary, or $190,000 for a couple.
Illinois families: the $4 million problem the federal news hides
The federal change is good news. It can also create a false sense of safety for Illinois families. Illinois keeps its own estate tax, and the state exemption sits at $4 million per person. That figure is not indexed for inflation, has not moved in over a decade, and does not transfer to a surviving spouse the way the federal exemption does.
The result is a wide gap. A married couple can fall far below the $15 million federal threshold and still owe a meaningful Illinois estate tax, with rates that climb as high as 16 percent. Add up a home, retirement accounts, a business interest, and life insurance, and a family that feels comfortably middle of the road can cross $4 million without realizing it. Illinois also adds certain lifetime gifts back into the calculation, which catches families who assumed gifting alone solved the problem.
For Illinois residents, and for Tennessee families who still own Illinois real estate or business interests, this is the item most worth reviewing before year-end. Trust structures that preserve each spouse’s separate $4 million exemption can change the outcome considerably, but only when they are in place and funded correctly.
Tennessee families: a friendlier state, but the federal rules still apply
Tennessee has no state income tax, no estate tax, no inheritance tax, and no gift tax. For state purposes, the picture is clean. That advantage is one reason some families consider establishing Tennessee residency, though domicile is a facts-and-circumstances question that deserves careful handling rather than a quick change of address.
Even with no state tax, Tennessee families above the federal threshold still face the 40 percent federal estate tax. Anyone with ties to a taxing state, Illinois included, can be pulled into that state’s system through property or business holdings. A clean home state does not always mean a clean estate.
Business owners: a deduction window that is open now and closes later
The 2025 law raised the cap on the state and local tax (SALT) deduction to $40,400 for 2026, up from the $10,000 cap that had been in place since 2018. The higher cap phases down for taxpayers with modified adjusted gross income above roughly $500,000 and will not fall below $10,000. It is also temporary. Under current law, the cap reverts to $10,000 in 2030.
That creates a defined window. For owners of pass-through businesses, the pass-through entity tax election that many states adopted remains available and can change how much of your state tax is deductible. Whether it helps depends on your entity type, your income, and your state. This is the kind of item where timing and coordination with your CPA matter, and where waiting until filing season usually means the chance has already passed.
Year-end moves that still carry a December 31 deadline
Several planning steps reset with the calendar regardless of the new law:
- Roth conversions, where converting in a lower-income year may reduce the lifetime tax on retirement assets.
- Tax-loss harvesting to offset realized gains in taxable accounts.
- Charitable strategies, including qualified charitable distributions from IRAs for those who have reached the required age, and bunching gifts to clear the standard deduction.
- Required minimum distributions, which carry steep penalties when missed.
- Final retirement plan contributions for the year.
None of these are exotic. They are routine, and they are also the steps most often left until it is too late to complete them properly.
The value is in the coordination
Each of these items touches the others. A gift that helps your Illinois estate tax can affect your income tax, your cost basis, and your heirs’ eventual capital gains. A SALT election that helps this year can interact with your retirement income plan. These decisions tend to work better when your advisor, CPA, and attorney are reading from the same plan rather than three separate ones.
That coordination is the heart of how we work. We quarterback the full picture, from investment strategy and tax-aware planning to estate and wealth-transfer questions and family office level support for the households that call for it.
This article is general information, not individual tax or legal advice. Your own situation may lead to different conclusions, so review any step with your tax and legal advisors before acting.
Advisory services offered through United Advisor Group, LLC, a Registered Investment Adviser (CRD #324205). Securities offered through Purshe Kaplan Sterling Investments, Member FINRA/SIPC. Ftacek Financial Services, LLC and United Advisor Group are independent entities. This article is for educational purposes only and is not individualized investment, tax, or legal advice. Consult your own advisors before acting on any strategy described.