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For the past several years, estate planning conversations across the country included an uncomfortable variable: a federal estate tax exemption that was scheduled to drop dramatically at the start of 2026. Under the 2017 Tax Cuts and Jobs Act, the exemption had been temporarily doubled. When that provision was set to expire, the exemption was projected to fall from roughly $14 million per person back to around $7 million, bringing a larger number of estates within federal tax range and requiring families to act before the deadline.
That sunset did not happen.
On July 4, 2025, the One Big Beautiful Bill Act was signed into law, permanently making the $15 million exemption effective January 1, 2026, with no expiration date. For New Mexico families, this is meaningful news, and it cuts in both directions. BNY Mellon
What the Law Actually Changed
The federal estate and gift tax exemption increased to $15 million per individual in 2026, up from $13.99 million in 2025. The new exemption level is permanent and will be adjusted annually for inflation starting in 2027. KHA Accountants
For married couples, this creates a combined exemption of $30 million when properly structured. ACTEC
The significance of the permanence is worth pausing on. The biggest difference is certainty. Under the temporary rules provided by the Tax Cuts and Jobs Act of 2017, families worried the exemption might be cut in half at the end of 2025. Many rushed to transfer property or set up trusts before year-end. Others hesitated, hoping Congress would act. Now that the exemption has been made permanent, families don't have to scramble before an arbitrary deadline. They can plan more thoughtfully, knowing the rules aren't scheduled to change overnight. Citizens Bank
What This Means for New Mexico Families Specifically
For the vast majority of New Mexico families, this change is more relevant to existing estate plans than to immediate tax liability. New Mexico has no state estate tax and no inheritance tax. The only estate-level tax that can reach a New Mexico estate is the federal one, and it touches very few estates. Carbon-gaul
At a $15 million per-person exemption, the federal estate tax affects a very small percentage of New Mexico estates. Most families reading this post will never owe federal estate tax under current law regardless of whether they have a plan in place.
But here's where the news matters even for families well below the threshold: the change has created a specific review trigger for anyone who established an estate plan in anticipation of the old sunset.
If Your Plan Was Built Around the Sunset, Read This
In the years leading up to 2026, many families with significant assets took action based on the assumption that the exemption would drop to approximately $7 million per person. That assumption drove a wave of estate planning activity, including accelerated gifting strategies, irrevocable trust formations, and family business transfers designed to move assets out of taxable estates before the clock ran out.
Some of those strategies worked exactly as intended and remain sound. Others may now need review because the landscape they were designed for no longer exists.
Many existing trusts include language that seemed reasonable when drafted but may now backfire. Take a trust created in 2020 that directs "assets up to the federal estate tax exemption" to go to children, with anything above that amount going to charity. When that trust was written, the exemption was around $11.7 million. Starting in 2026, the same language would direct $15 million to the children instead.
Language like "up to the applicable exemption amount" or "the maximum amount that can pass free of estate tax" is common in estate planning documents drafted over the past decade. With the exemption now at $15 million, the distribution outcomes that language produces may be very different from what the family originally intended.
If your estate plan contains formula clauses tied to the federal exemption amount, a review with your attorney is worth scheduling.
What About Gifts and Trusts Already Made?
If your estate previously exceeded the 2025 threshold and you implemented irrevocable strategies to reduce taxable assets, those transferred assets will remain outside your estate permanently. In other words, gifts made and irrevocable trusts funded in anticipation of the sunset are done. The assets are out of the estate and that transfer stands. ACTEC
Whether those strategies still make sense going forward, or whether additional planning is warranted in light of the higher exemption, is the question worth discussing with your estate planning attorney.
The Annual Gift Tax Exclusion Also Increased
Alongside the estate tax changes, the IRS allows individuals to give up to $19,000 per recipient per year in 2025 and 2026 without triggering gift tax reporting requirements. A married couple can give up to $38,000 per recipient per year combined. Gifts within these limits do not count against your lifetime estate and gift tax exemption. Settled
Annual gifting within the exclusion limit remains one of the most accessible wealth transfer tools available to New Mexico families, particularly those who want to gradually move assets to children or grandchildren without complex legal structures.
What Most New Mexico Families Should Actually Do Right Now
For most New Mexico families, the federal estate tax exemption changes are background context rather than an immediate call to action. The more pressing estate planning questions remain the same ones they have always been:
Do you have a will? Does it reflect your current family situation? Do you have a durable financial power of attorney and a healthcare power of attorney? Does your surviving spouse or partner have the legal authority to act on your behalf during a medical crisis? Are your beneficiary designations on retirement accounts and life insurance current?
These documents matter for every New Mexico family regardless of estate size, and they matter now, not after a future tax law change.
For families with larger estates, particularly those with existing plans that include formula clauses tied to the federal exemption, a specific review focused on how those clauses now operate is the right next step.
The Permanence Caveat
One word of caution on the word "permanent." "Permanent" only lasts until Congress changes again, but at least for the next few years, families can plan with confidence. Citizens Bank
Tax law changes with administrations and Congressional priorities. The $15 million exemption is permanent in the sense that it has no scheduled sunset, not in the sense that it is constitutionally protected. For families engaged in long-term estate planning, building flexibility into the plan remains more important than optimizing around any single exemption number.
Questions About Your Estate Plan?
Genus Law Group helps New Mexico families build and update estate plans that reflect their current circumstances and current law. Whether you have an existing plan that may need review in light of the 2026 changes, or you're starting from scratch, we're accepting new estate planning clients at our offices in Albuquerque and Las Cruces.
Call us at (505) 317-4455 in Albuquerque or (575) 215-3500 in Las Cruces, or reach us through the contact form at genuslawgrp.com.
