Peter V. Arcese

2025 Estate & Gift Tax Updates: Looking Ahead

The IRS has announced inflation-adjusted estate and gift tax exemptions for 2025:

Estate & Gift Tax Exemption:

• Individual exemption projected at approximately $13.99 million (up from $13.61 million in 2024)

• Married couples potentially can protect up to $27.98 million

• 40% tax rate remains unchanged for amounts exceeding the exemption

Annual Gift Tax Exclusion:

• Projected at $19,000 per recipient (up from $18,000 in 2024)

• Married couples can gift up to $38,000 per recipient

Critical Planning Considerations:

• 2025 is the FINAL YEAR of the current higher exemption amounts

• Beginning January 1, 2026, the base exemption amount is scheduled to revert to $5 million (adjusted for inflation, estimated to be around $7 million)

• This represents a potential reduction of approximately 50% in available exemption

Planning Implications:

• Limited window to utilize historically high exemption amounts

• Crucial year for high-net-worth individuals to complete large gifts

• Strategic importance of completing wealth transfers before the 2026 reduction

Contact our office to develop a strategy that maximizes these exemption amounts before the significant changes in 2026. Early planning is essential to ensure proper execution of complex gifting strategies.