Charles R. Johnson, Wealth Director, Fiduciary Trust International
Richard Pianoforte, Head of New York Personal Tax Group
Ed Mooney, Director of Financial Planning, Fiduciary Trust International
The post-election tax landscape is coming into focus, creating more certainty about how to plan for income and estate taxes in the years ahead. The most significant outcome for tax policy is that we believe many key provisions of the Tax Cuts and Jobs Act (TCJA) for individuals, which would have expired after next year, are now likely to be extended.
For most taxpayers, this may mean:
- Reduced individual tax rates continue: Republicans aim to extend today’s lower rates to prevent tax increases on individuals. If extended, the top rate on ordinary income would stay at 37% versus 39.6%.
- Standard deduction remains high: The TCJA nearly doubled the standard deduction. For 2025, it rises to $15,000 for individuals and $30,000 if you’re filing jointly.
- High estate and gift tax exemption remains: Estate tax exemption increases to $13,990,000 per individual in 2025, $27,980,000 for couples.
- State and local tax (SALT) deductions: The TCJA capped state and local tax deductions at $10,000 per person and per couple. This provision could revert to being unlimited or may instead be capped at a higher amount. But be aware that the alternative minimum tax exemption is also scheduled to be reduced unless extended, potentially lowering the actual tax benefit for many taxpayers. Given this, traditional tax planning strategies such as looking for ways to reduce taxable income, transferring wealth and giving to charity, remain beneficial for most taxpayers.
Find ways to reduce your taxable income
Since we do not expect taxes to increase in 2025, we generally advise clients to focus on reducing their taxable income or postponing their tax liabilities to the following year. This can be accomplished by accelerating deductions in the current year, while postponing income events into the next year.
- Harvest unrealized losses. Consider taking unrealized losses in your taxable investment portfolios to offset realized gains. If you take losses in excess of gains, you can use up to $3,000 of those losses to offset ordinary income in the current year and carry over the balance to future years. Bear in mind that to abide by wash sale rules you cannot buy back that security or any other substantially identical security within 30 days before or after you sold it at a loss.
- Increase your retirement account contributions. Income can be reduced by making maximum deductible contributions to your eligible retirement accounts, such as your traditional IRA or 401(k). IRS limits for tax-deferred retirement accounts are indexed to inflation so typically increase each year, providing a chance to build your retirement savings.
- Send your required IRA distribution to charity. If you are older than 70 ½, have an IRA and charitable intent, another technique is to do a QCD (qualified charitable distribution) where you may give up to $105,000 (in 2024) and $108,000 (in 2025) directly from your IRA to charitable organizations and not have that amount count toward your income (or get a deduction).
- Bundle charitable contributions. If your taxable income is below the standard deduction threshold, consider “bundling” two years of charitable contributions into the current year. This could move you past the standard deduction threshold, allowing you to itemize your deductions. Then take the standard deduction the following year. By doing this, you help maximize the way that charitable contributions can reduce your taxable income in both years.
- Postpone income. If you can’t reduce your taxable income any further, take whatever type of income event you can control and postpone it to next year. This can be done by postponing things such as ROTH IRA conversions, taking capital gains, a bonus or a commission or exercising stock options. By postponing those income events, you’ll push off paying the tax for another year.
Capitalize on wealth transfer opportunities
Before the election, many aimed to reduce their taxable estates to avoid the 40% tax on amounts exceeding the estate tax exemption, fearing the exemption might be halved in 2026. Although we believe the exemption amount is unlikely to be reduced, trust structures established to transfer wealth remain useful. Trusts enable you to specify how and when assets are distributed, and they also help protect the assets from creditors.
Tax-effective ways to transfer wealth include:
Establishing a SLAT. With a Spousal Lifetime Access Trust (SLAT) you can use your lifetime gift and estate tax exemption while preserving the availability of the trust property for the support of your spouse and family. The assets in the trust are allowed to grow income tax free. Once the trust is established, you, as the grantor, will be considered the owner of the trust for income tax purposes. This means that the trust income is taxed to you, not in the trust. Freeing the trust from the payment of income tax preserves more of the trust property for growth, in addition to the tax payments serving to reduce your taxable estate – all without additional gift tax, as well as providing some asset protection for your beneficiaries.
Using your annual gift exclusion. This allows you to gift assets to as many people as you want without paying estate tax or tapping into your estate tax exemption amount. In 2024, you can gift up to $18,000 per person, or $36,000 as a couple. In 2025, that amount is $19,000 per person, $38,000 per couple.
You can give more than that amount if desired. If you gift more than the annual exclusion amount, you are required to file a gift tax return, but if your taxable gifts remain below the estate tax exemption amount, you will owe no tax.
Use charitable contributions to reduce income and estate taxes
Charitable gifting is one of the few deductions remaining that allow individuals to reduce their tax liability. In doing so, you also reduce the amount of your estate that may be subject to estate tax.
- Donate appreciated securities. One of the most efficient ways to gift is to do so with appreciated property. The reason is that you will not pay capital gains tax if you simply donate the appreciated property to charity. You should use property that has a low cost basis and make sure that you held it for more than one year.
- Establish a Donor Advised Fund (DAF). If you have charitable intent but are unsure of which charitable organization will ultimately receive the gift, consider a DAF. This allows you to put any amount of cash or appreciated property away before year end, get the deduction in the current year, yet decide who benefits at a future time. These are especially useful vehicles at year end when you might have an unexpected income event but are undecided about which organization to give to.
- Create a Charitable Remainder Trust (CRT). If in your estate documents you have named — or have considered naming– a charity or charities as a beneficiary of some of your assets, funding a CRT now can provide you with a current income tax deduction. If you fund the CRT with appreciated securities, the trust can diversify the portfolio and provide a stream of income to you for life or a term of years.
This material should not be construed in any way as investment, tax, estate, accounting, legal or regulatory advice. Any description of tax consequences set forth herein is not intended as a substitute for careful tax planning. Please consult tax counsel for advice specifically related to any and all tax consequences.
Charles R. Johnson, Wealth Director, Fiduciary Trust International is responsible for developing investment and trust relationships with families and organizations. He works closely with the tax, investment and planning teams to help clients determine optimal asset allocation and transfer strategies.
Richard Pianoforte, Head of New York Personal Tax Group, Fiduciary Trust International, provides tax services to clients with complex financial situations and goals. He is part of a team of experts that offers comprehensive and customized financial planning and solutions for wealth transfer, estate planning, charitable giving, and philanthropy.
Ed Mooney, Director of Financial Planning, Fiduciary Trust International, provides goal-based financial strategies for the tax efficient and successful transfer of family wealth, planning for retirement, the sale and succession of business interests and achievement of philanthropic goals.