Although chromium trihalides are widely regarded as a promising class of two-dimensional magnets for next-generation devices, an accurate description of their electronic structure and magnetic interactions has proven challenging to achieve. Here, we quantify electronic excitations and spin interactions in CrX₃ (X = Cl, Br, I) using embedded many-body wavefunction calculations and fully generalized spin Hamiltonians. We find that the three trihalides feature comparable d-shell excitations, consisting of a high-spin ⁴A₂(t_2g³e_g⁰) ground state lying 1.5–1.7 eV below the first excited state ⁴T₂ (t_2g²e_g¹). CrCl₃ exhibits a single-ion anisotropy A_sia = − 0.02 meV, while the Cr spin-3/2 moments are ferromagnetically coupled through bilinear and biquadratic exchange interactions of J₁ = − 0.97 meV and J₂ = − 0.05 meV, respectively. The corresponding values for CrBr₃ and CrI₃ increase to A_sia = −0.08 meV and A_sia= − 0.12 meV for the single-ion anisotropy, J₁ = −1.21 meV, J₂ = −0.05 meV and J₁ = −1.38 meV, J₂ = −0.06 meV for the exchange couplings, respectively. We find that the overall magnetic anisotropy is defined by the interplay between A_sia and A_dip due to magnetic dipole–dipole interaction that favors in-plane orientation of magnetic moments in ferromagnetic monolayers and bulk layered magnets. The competition between the two contributions sets CrCl₃ and CrI₃ as the easy-plane (A_sia + A_dip >0) and easy-axis (A_sia + A_dip <0) ferromagnets, respectively. The differences between the magnets trace back to the atomic radii of the halogen ligands and the magnitude of spin–orbit coupling. Our findings are in excellent agreement with recent experiments, thus providing reference values for the fundamental interactions in chromium trihalides.