IRS Announces Annual Inflation Adjustments for 2025

The IRS announced the annual inflation adjustments for 2025.The value of assets that can be passed at death free from the federal estate tax, referred to as the “applicable exclusion amount,” is currently $13,610,000 per person, to increase to $13,990,000 per person in 2025. The federal generation-skipping transfer tax (“GSTT”) exemption tracks the applicable exclusion amount. The exclusion amount for gifts made during lifetime without paying gift tax also tracks the applicable exclusion amount, reunifying the amount that can be given during lifetime or at death to the same amount.

The annual exclusion amount for gifts made in 2025 is increasing from $18,000 per donor/donee in 2024 to $19,000 per donor/donee in 2025. This means that you may give $19,000 per year per donee (for married couples, a combined $38,000 per year per donee) beginning January 1, 2025. For additional inflation adjustments, please see https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025.