The Uncertain Future of the Gift and Estate Tax Exemption

International Wealth & Asset Planning Blog Jan 29, 2025 Denver, CO

The current gift and estate tax exemption in 2025 is $13.99MM per person and $26.98MM per married couple. Due to the sunset provisions in the Tax Cut and Jobs Act (the “Act”), however, these amounts are scheduled to be roughly cut in half after 2025. Although it is not certain what the exemption will be if it is decreased after this year, it will likely be around $7MM per person and $14MM per married couple.

Due to the results of the 2024 election, whereby Republicans took control of the White House, House of Representatives, and the Senate, many clients are inquiring as to whether the Act will be extended, and particularly have asked if this extension could include an extension of the current high estate and gift tax exemptions. As of now, without any affirmative action by Congress, the estate and gift tax exemption will decrease on January 1, 2026, as scheduled in the Act. There has been discussion on extending the Act, but Republicans have a small majority in the House of Representatives, so it is not a certainty that the tax cuts will be extended. Even if the tax cuts are extended, it is possible that the increased estate and gift tax exemption will not also be extended. We will begin to get a clearer picture concerning these matters once draft legislation starts to circulate.

With this uncertainty, it is important to know what, if any, actions should be taken at this time. First off, any planned gifting that is not being specifically done to use up the increased gift and estate tax exemption should move forward as planned. There is no harm in making gifts at this time. Additionally, some families may want to make gifts to utilize their increased exemption amounts so that they do not have to deal with this uncertainty going forward. These families can do so at this time if they would like peace of mind knowing that they are covered regardless of whether the increased exemption is extended.

However, before making significant gifts, most families would prefer to have clarity concerning the estate and gift tax exemption and whether the Act will be extended. For these families, there is no need to make any gifts at this time, but they should be prepared to act by the end of the year if Congress is unable to extend the Act (or otherwise allows the increased estate and gift tax exemption to sunset). We may not know until close to the end of the year if the exemption will be extended, so families should be discussing their options now with their advisors so that they are prepared to act quickly at the end of the year if it becomes necessary to do so. Hopefully, we will begin to get clarity on whether the increased exemption will be extended in the coming months as we begin to see Congress’s legislative agenda.

If you have any questions, please contact [email protected].

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International Wealth & Asset Planning Blog

The Uncertain Future of the Gift and Estate Tax Exemption

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