The IRS just released tax inflation adjustments for the tax year 2025.  Revenue Procedure 2024-40, published yesterday, October 22, 2024, provides inflation-adjusted numbers affecting many areas of the tax code, including those pertaining to estate planning.  Notably:

• The unified credit against gift and estate tax will rise to $13,990,000 per individual in 2025 (up from $13,610,000 in 2024).  This number represents the cumulative lifetime amount that each individual can give away during lifetime without gift tax, at death without estate tax, or partially each.  Together, a married couple will have twice this exemption ($27,980,000) available to pass wealth on to family members and friends.  The marginal estate tax rate remains at 40%.
• The exemption from generation-skipping transfer (GST) tax, a tax separate from and in addition to the gift and estate tax, will also rise to $13,990,000 per individual in 2025 (up from $13,610,000 in 2024).  The GST tax applies, after gift and estate tax is levied, to gifts made during lifetime or at death to a beneficiary who is two generations more more below the donor, in the case of a close relative, or to a beneficiary more than 37 1/2 years younger than the donor, in the case of a beneficiary who is not a close relative of the donor.  This exemption from GST tax allows individuals to pass on wealth to grandchildren and younger beneficiaries without GST tax. The marginal GST tax rate remains at 40%.
• The annual exclusion from gift tax will rise to $19,000 in 2025 (up from $18,000 in 2024).  This amount can be given per donor per donee to each of an unlimited number of recipients during the calendar year without using up any credit against gift tax.  Together, a married couple will be able to gift twice that amount ($38,000) in 2025 to each beneficiary.

These historically high exemptions from gift, estate and GST tax provide a limited window of opportunity for very effective estate planning.  Under the current tax laws, these exemptions will automatically be reduced to $5 million, adjusted for inflation, on January 1, 2026.  Contact Brian to discuss taking advantage of this opportunity.

© 2024 Brian Berman Law, P.C. All rights reserved. This summary contains information of a general nature that is not intended to be legal advice and it does not create an attorney-client relationship between Brian Berman Law, P.C. and the reader. Each reader should consult his or her own legal counsel with respect to his or her individual circumstances and how this material may affect his or her situation. This summary may constitute attorney advertising. Prior results do not guarantee a similar outcome.