The opportunity to give large, tax-free gifts to your heirs may soon diminish. With significant gift tax changes coming in 2025, the current federal gift tax exemption is set to be drastically reduced. Ensure your wealth stays in the family by revisiting your estate plan now.
Understanding Gift Tax Changes in 2025
The Tax Cuts and Jobs Act of 2017 introduced a significant, temporary benefit for taxpayers. This law more than doubled the amount individuals could gift or bequeath without incurring federal gift or estate taxes, with the exemption adjusted annually for inflation.
In 2024, a single taxpayer can claim a $13.61 million exemption on lifetime gifts or estates. For married couples, this amount doubles, offering substantial tax savings. However, this window of opportunity is set to close at the end of 2025. At that point, the exemption will revert to its pre-2017 level—an estimated $7 million per individual, adjusted for inflation.
Why You Should Plan Ahead
While there is speculation that Congress may extend or modify the current exemption, no new legislation has been passed. The current law remains in effect, meaning that time is limited to capitalize on this elevated exemption.
By planning now, you can lock in the benefits of the current exemption and potentially save your heirs millions in taxes. Waiting too long could lead to missed opportunities as the 2025 deadline approaches.
How to Prepare for Gift Tax Changes 2025
Here are key steps to take with your estate advisor:
1. Review Your Estate Plan
Evaluate your current estate plan to ensure it aligns with the upcoming changes to the gift tax. Identify opportunities to transfer wealth under the current exemption.
2. Make Significant Lifetime Gifts
Consider transferring high-value assets such as property, business interests, or stocks before the exemption decreases.
3. Leverage Spousal Gifting
Married couples can take advantage of the ability to double the exemption by gifting jointly, maximizing tax-free transfers.
4. Plan for Post-2025 Scenarios
Even with a reduced exemption, tools like irrevocable trusts, charitable donations, and family limited partnerships can help minimize your tax burden.
Protect Your Family’s Financial Future
As the sunset of the current gift tax exemption draws nearer, the urgency to plan increases. By acting now, you can secure your family’s financial future and ensure a smooth transition of wealth across generations.
Speak with an Estate Plan Attorney
Need help preparing for the 2025 gift tax changes? Hudack Law specializes in estate planning and is here to guide you through this critical process. We proudly serve clients in California, Utah, and Arizona. Call our Toll-Free line at (877) 314-4309 or visit our website to schedule a consultation with one of our experienced attorneys. Take action today to protect your legacy.