December 2, 2024 / Newsletters
IRS Announces Larger Gift, Estate and Generation-Skipping Transfer Tax Exemptions for 2025
With the release of Revenue Procedure 2024-40, the IRS announced annual inflation adjustments to over 60 tax provisions, including adjustments relevant to estate planning. The gift, estate, and generation-skipping transfer (GST) tax exemptions will increase to $13,990,000 (from $13,610,000 in 2024). As a reminder, the estate and gift tax exemption is the combined amount you can transfer during your lifetime and/or at death before paying any estate or gift tax. The GST tax exemption is the amount you can pass directly (or indirectly, through a trust) to your grandchildren and/or more remote descendants without the imposition of GST tax. For a married couple who has used all of their existing lifetime gift tax exemption through 2024, they will now have an additional $760,000 of gift tax exemption available in 2025.
The annual gift tax exclusion for 2025 will be $19,000 (increased from $18,000 in 2024). The annual gift tax exclusion is the amount that you can gift to any one recipient in a year without being subject to gift tax or reducing your combined gift and estate tax exemption.
The annual exclusion for gifts to a non-citizen spouse in 2025 will increase to $190,000 (from $185,000 in 2024).