New York’s Proposed Estate Tax Overhaul Is a Wake-Up Call — Even If You Live in Georgia

A dramatic proposal out of New York City is sending shockwaves through the estate planning world — and not just for clients who live or work in New York. The proposal is a vivid reminder that the tax landscape governing your estate plan is not static. Laws change. Exemptions change. Political winds shift. And an estate plan that was perfectly calibrated two or three years ago may be dangerously out of date today.

Here is what is happening, what it means, and why now is the time to take stock of where your plan stands.

The Mamdani Proposal: A Near-90% Cut to New York’s Estate Tax Exemption

New York City Mayor Zohran Mamdani has backed a proposal that would slash New York State’s estate tax exemption from its current $7.16 million (indexed for inflation, approximately $7.35 million in 2026) down to just $750,000 — a reduction of nearly 90%. At the same time, the proposal would more than triple the state’s top marginal estate tax rate, raising it from 16% to 50%.

To put that in concrete terms: under current New York law, a family needs an estate worth more than $7.35 million before New York estate tax comes into play. Under Mamdani’s proposal, that threshold drops to $750,000 — a figure that, in the New York metropolitan area, could easily be reached by a family whose primary asset is simply the home they raised their children in.

Critics have been pointed in their responses. Economists and policy analysts have warned that the proposal would drive wealth and residents out of the state, and that what is framed as a tax on the rich has a consistent historical tendency to creep downward and capture the merely comfortable.

What New York’s Estate Tax Already Looks Like (And Why It Matters)

Even before any new proposal, New York’s estate tax is one of the most aggressive in the country, and it contains a quirk that surprises many clients: the so-called “fiscal cliff.”

Unlike the federal estate tax — which applies only to amounts above the exemption — New York’s estate tax can apply to the entire taxable estate once the estate’s value exceeds the exemption threshold by more than 5%. This means a New York estate worth $7.4 million could face a significantly larger tax bill than one worth $7.3 million, creating a sharp and counterintuitive planning pressure point. Careful planning around this cliff is already essential for New York clients, and the Mamdani proposal would make that planning far more urgent for a far broader range of families.

Anyone with New York connections — residents, non-residents who own real property in New York, business owners with New York-sited assets — needs to be thinking carefully about New York’s estate tax exposure. This is not a hypothetical concern for the ultra-wealthy. It is a present planning issue for a wide range of successful families.

The Federal Picture: Clarity at Last — But for How Long?

At the federal level, 2025 brought the resolution of one of the most significant estate planning uncertainties of recent years. The One Big Beautiful Bill Act, signed into law on July 4, 2025, permanently increased the federal estate, gift, and generation-skipping transfer tax exemptions to $15 million per individual — $30 million for a married couple — effective January 1, 2026, with future inflation adjustments. This legislation eliminated the scheduled “sunset” under the 2017 Tax Cuts and Jobs Act that would have reduced the exemption to roughly $7 million per person at the start of 2026.

The federal estate tax rate of 40% remains unchanged. The annual gift tax exclusion is $19,000 per recipient in 2026. Portability rules for married couples remain intact, though an estate tax return must still be filed to elect portability — even when no tax is owed.

This is genuinely good news. The “use it or lose it” anxiety that drove so much emergency gifting planning through 2024 and early 2025 has given way to a more measured environment where families can make gifting and transfer decisions based on their actual goals rather than artificial deadlines. Trust strategies — SLATs, GRATs, IDGTs, ILITs, and dynasty trusts — remain powerful planning tools, and the elevated exemptions create meaningful runway for sophisticated planning.

But here is the caution: the word “permanent” in tax law means only that there is no built-in expiration date. A future Congress can always revisit the law. The history of the estate tax is a history of shifts — sometimes dramatic ones — driven by changes in political power. Clients who believe their estate plan is “done” because the federal exemption is now permanently high are making a bet that the political climate will not change. That is not a bet most planners would recommend.

Georgia: A Favorable Jurisdiction — With Important Caveats

For clients based in Georgia, there is genuinely good news at the state level: Georgia does not impose a state-level estate tax or inheritance tax. Following the repeal of Georgia’s estate tax in 2014, Georgia residents are subject only to the federal estate tax — making Georgia one of the more favorable states in the country from an estate tax standpoint.

This is a meaningful advantage, and it is one reason why domicile matters so much in estate planning. Clients who own property in multiple states, who have business interests in states like New York, Massachusetts, Oregon, or Washington, or who spend significant time in states with their own estate taxes, need to think carefully about how those states’ rules apply to their estates.

Georgia’s favorable treatment is not guaranteed in perpetuity, either. State legislatures revisit tax structures, and while Georgia has shown no appetite for reinstating an estate tax, advisors who have practiced for any length of time have seen “permanent” state tax policies reversed before. Planning that anticipates potential change — through trust structures, strategic gifting, and flexible document design — is always preferable to planning that assumes the current rules are forever.

Why Your Estate Plan Is Not a “Set It and Forget It” Document

The Mamdani proposal, the OBBBA’s federal changes, and the ongoing volatility of state-level estate tax policy all point to a single foundational principle: estate planning is not a transaction. It is an ongoing process.

Here is a non-exhaustive list of the kinds of changes — in law and in life — that can render an existing estate plan suboptimal or even counterproductive:

Changes in exemption amounts. A plan drafted when the federal exemption was $5 million looks very different from one drafted when the exemption is $15 million. Credit shelter trust formulas tied to “the maximum amount that can pass free of federal estate tax” can produce unintended results as exemptions move — sometimes disinheriting a surviving spouse or triggering unintended state estate taxes.
Changes in state law. A client who moved from New York to Georgia may still hold New York real estate or LLC interests that expose their estate to New York estate tax. A client who moved in the other direction faces a dramatically changed state tax environment. State-level changes — whether proposed reforms like Mamdani’s or quieter technical adjustments — can change the calculus significantly.
Sunset and anti-sunset provisions. The OBBBA is “permanent,” but Congress wrote the TCJA as permanent in its corporate provisions too, while always knowing the individual provisions were temporary. Sophisticated planning documents flexible enough to adapt to future law changes are worth the additional work.
Changes in the client’s asset mix. A plan built around a concentrated stock position, a family business, a real estate portfolio, or retirement accounts should be revisited whenever those assets change materially in value or structure. IRAs, in particular, require careful trust design in light of the SECURE Act’s distribution rules.
Changes in the client’s family. Births, deaths, divorces, remarriages, estrangements, a child or grandchild developing special needs — all of these can render existing trust provisions inadequate or inappropriate.
Changes in the law governing trusts. Rules governing directed trusts, trust decanting, trust protectors, and domestic asset protection trusts continue to evolve at the state level. Georgia has taken meaningful steps to modernize its trust law, and clients with older irrevocable trusts may find that their documents do not take advantage of these developments.

What You Should Be Doing Now

For New York clients and clients with New York exposure: the Mamdani proposal may not become law in its current form, but it should prompt a serious conversation about your current New York estate tax exposure, the structure of your New York-sited assets, and whether domicile, trust structuring, or lifetime gifting strategies make sense given the direction of New York policy.

For Georgia clients: take advantage of Georgia’s favorable jurisdiction, but do not ignore federal planning opportunities. The $15 million per-person federal exemption creates substantial capacity for lifetime gifting, dynasty trust funding, and other transfer strategies. Clients who made large gifts prior to 2025 in anticipation of the TCJA sunset should review whether their plans need adjustment in light of the OBBBA’s changes.

For all clients: if your estate plan was last reviewed more than two to three years ago, it is overdue. If it was drafted before the SECURE Act, before portability, before the TCJA, or before any significant change in your personal or financial circumstances, it may contain provisions that no longer accomplish what you intend.

Conclusion: The Law Changes. Your Plan Should Too.

The Mamdani proposal is a useful — if dramatic — illustration of how quickly the estate tax landscape can shift. It may become law, it may not, or it may pass in a modified form. But the underlying dynamic it represents — state and federal policymakers constantly revisiting the rules governing wealth transfer — is not going away.

The best estate plans are not just technically correct on the day they are signed. They are designed with flexibility, reviewed regularly, and updated when the law or life demands it. If it has been a while since your plan has had a serious look, that conversation is worth having sooner rather than later.