Latest Estate Tax Rates--2025
For 2025 the federal estate tax exemption rises to $13.99 million per person from $13.61 million in 2024, and the annual gift exclusion amount rises to $19,000 from $18,000 in 2024. These numbers, adjusted annually for inflation, matter to wealthy folks who are trying to whittle down their estates by making gifts to family members. It’s an annual exercise, done at year-end or the first of the year, depending on the family. Currently, the estate tax exclusion will sunset on December 31, 2025 and return to $7,000,000 per person pending Congressional action.
Gift Tax Exclusion
The gift tax is tied to the estate tax, so the inflation indexing helps the wealthy make the most of tax-free lifetime giving too. You can make the gifts during your lifetime; just you have to keep track of them as they count against the eventual estate tax exemption amount. In other words, you can’t double dip. So a woman who set up a trust for her kids with $5 million a few years ago could make new gifts to add to the trust and bring it up to the $13.99 million amount. A husband and wife each get their own exemption. So a couple will be able to give away $27.98 million tax-free in 2025 (assuming they haven’t made prior lifetime gifts).
Totally separate from the lifetime gift exemption amount is the annual gift tax exclusion amount. It’s $19,000 for 2025 You can give away $19,000 to as many individuals as you’d like. A husband and wife can each make $19,000 gifts to the same person. So a couple could make $19,000 gifts to each of their four grandchildren, for a total of $152,000. The annual exclusion gifts don’t count towards the lifetime gift exemption.
