For individuals passing away in 2025, the federal estate tax exemption will increase to $13.99 million, up from $13.6 million in 2024. Married couples can double this exemption, allowing them to shield up to $27.98 million from estate taxes, an increase from $27.22 million last year.
The lifetime estate and gift tax exemption will mirror the estate tax exemption, also rising to $13.99 million per individual in 2025. This increase means that married couples can protect up to $27.98 million from both estate and gift taxes.
In addition, the IRS has raised the annual gift tax exclusion for 2025. The new exclusion will be $19,000 per recipient, allowing you to gift up to $19,000 to any individual in 2025 without affecting your lifetime exemption. For married couples, this amount doubles to $38,000 per year.
For example, an individual with five descendants could transfer up to $95,000 to their heirs in 2025, without using any of their lifetime exemption. This allows them to pass on substantial assets without incurring gift tax and the assets removed from the taxpayer’s estate are not only excluded from the taxable estate, but any future appreciation in value will also avoid both gift and estate taxes.
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