Transfer Tax Exemptions for 2025

On October 22, 2024, the IRS issued Revenue Procedure 2024-40 setting forth the inflation adjusted transfer tax exemptions for 2025. The Basic Exclusion Amount (BEA) will be $13,990,000.  The increase means that in 2025, an individual may make gifts during life or at death totaling $13,990,000 without incurring gift or estate tax; a married couple will be able to transfer $27,980,000 of assets free of transfer taxes.  The Generation-Skipping Transfer (GST) Exemption under section 2631 of the Code will also increase to $13,990,000.

The annual gift tax exclusion provided by Code section 2503 will increase in 2025 to $19,000 per donee (or $38,000 if spouses elect gift-splitting).

The gift tax annual exclusion for gifts to non-citizen spouses as set forth in Code sections 2503 and 2523(i)(2) will increase to $190,000.

The 2025 exemptions mean that even a taxpayer who has fully used the BEA to shelter lifetime gifts will be able to give an additional amount this year free from transfer taxes.

Those who have made large gifts to irrevocable trusts or outright to descendants should consider additional gifts in 2025 to take advantage of the increases in the BEA and the GST Exemption.  We recommend consulting your estate planning attorney about strategies that will secure the benefit of the larger estate, gift and GST exemptions, which under current law are scheduled to sunset at the end of 2025.