2025 Estate Tax Changes

In my last blog post of 2024, I discuss changes to estate and gift taxes for 2025.  As with Social Security and the Medicaid and VA programs which I have already detailed here in past weeks, inflation adjustments have changed some numbers applicable to estate and gift taxes.

Estate tax is due on certain individual’s estates after they die.  While New Jersey does not currently have an estate tax (we do still have an inheritance tax), federal estate tax still exists for estates over a certain size.  For persons dying in 2025, only estates over $13,990,000 are subject to federal estate tax up from $13,610,000 in 2024.

I should note that the current estate tax law is set to expire at the end of this year.  Unless the incoming Congress and president agree to extend the law, when it “sunsets”, the old law will come back with the exemption cut in half.  While many believe the law will, in fact, be extended, we should know for certain sometime before the end of next year.

The annual gift tax exemption is also set to be bumped up.  In 2024 one could gift up to $18,000 per person per year without either paying gift taxes or using a part of the $13,610,000 exemption.  In 2025 the annual exemption will increase to $19,000 per person per year.  For married couples, because of what is called a “split gift”, they can gift as much as $38,000 per person per year ($19,000 x 2).