In addition, the amount is indexed for inflation. As a result, for 2024, a single taxpayer can claim a federal estate and lifetime gift tax exemption of $13.61 million. Couples making joint gifts can double that amount.
Scheduled Sunset of the Double Exemption
The result will be an exemption for 2026 somewhere between $7 million and $7.25 million, depending on inflation.
In addition, the estate and gift tax exemption will be $13.99 million per individual for 2025 gifts and deaths, up from $13.61 million in 2024. For family offices, these updates may provide additional capital for wealth preservation and transfer as part of a tax planning strategy.
What is the lifetime gift tax exemption? In addition to the annual gift tax exclusion, you get a lifetime gift tax exclusion. Any amount you give over the annual limit is subtracted from your larger lifetime limit. Once you've gifted over your lifetime amount, you may begin to owe taxes.
Bottom Line. California doesn't enforce a gift tax, but you may owe a federal one. However, you can give up to $19,000 in cash or property during the 2025 tax year and up to $18,000 in the 2024 tax year without triggering a gift tax return.
Key takeaways. If the current law is unchanged, as of Jan 1, 2026 the current lifetime estate and gift tax exemption will be cut approximately in half.
Individual income tax rates (10%, 12%, 22%, 24%, 32%, 35%, and 37%) will expire after 2025 and revert to pre-TCJA rates.
As mentioned above, each dollar an individual owns above $13,610,000 will be subject to the federal estate tax and be taxed up to the maximum federal rate of 40% if the individual dies in 2024. The only exception to this is if the assets are passed to a U.S. Citizen spouse or to a charity.
The DSUE rules will remain in effect post-2025. This means that surviving spouses who have made a portability election before 2026 will retain the deceased spouse's exemption amount, even after the exemption is reduced.
The primary way the IRS becomes aware of gifts is when you report them on form 709. You are required to report gifts to an individual over $17,000 on this form. This is how the IRS will generally become aware of a gift. However, form 709 is not the only way the IRS will know about a gift.
Starting in 2026, tax rates are scheduled to revert to the higher pre-2018 levels. The table below shows the existing and anticipated tax rates if the TCJA sunsets. In addition, the brackets will be compressed, causing higher tax rates to kick in at lower income thresholds.
If you want to give hefty gifts to your loved ones without worrying about paying a gift tax, you should give something that doesn't exceed the annual credit of $18,000. The good news is that the limit is set per person, and you can pay the same amount to another person in the same year without filing the return.
Since then, we have seen the exemption rise to $13,610,000 in 2024 due to inflation. However, on January 1, 2026, the exemption is scheduled to automatically reset (or sunset) to $5,000,000, indexed to inflation (approximately $7,000,000), unless Congress acts prior to then.
Gift tax is paid by the giver of money or assets, not the receiver. The good news is that this threshold is so high that few people end up having to pay the gift tax. These thresholds are referred to as exclusions.
Use the annual gift tax exclusion.
Each year, you can give a certain amount of property to a family member without incurring gift taxes. As of 2024, the annual gift tax exclusion is $18,000 per recipient. This means you can gradually transfer property over several years to minimize tax liabilities.
Another key difference: While there is no federal inheritance tax, there is a federal estate tax. The federal estate tax generally applies to assets over $13.61 million in 2024 and $13.99 million in 2025, and the federal estate tax rate ranges from 18% to 40%.
After an inflation adjustment, the 2024 standard deduction increases to $14,600 for single filers and married couples filing separately and to $21,900 for single heads of household, who are generally unmarried with one or more dependents. For married couples filing jointly, the standard deduction rises to $29,200.
There's one big caveat to be aware of—the $13.61 million exception is temporary and only applies to tax years up to 2025. Unless Congress makes these changes permanent, after 2025 the exemption will revert to the $5.49 million exemption (adjusted for inflation).
For 2024, the additional standard deduction amounts for taxpayers who are 65 and older or blind are: $1,950 for Single or Head of Household (increase of $100) $1,550 for married taxpayers or Qualifying Surviving Spouse (increase of $50)
Starting in 2025, tax Social Security benefits in a manner similar to private pension income.
Each year, the IRS sets the annual gift tax exclusion, which allows a taxpayer to give a certain amount (in 2025, $19,000) per recipient tax-free without using up any of the taxpayer's lifetime gift and estate tax exemption (in 2025, $13.99 million).
In 2026, personal exemptions would return and be valued at $5,300. The standard deduction would shrink, and be valued at $8,350 for single filers, $16,700 for joint filers, and $12,250 for head of household filers, compared to $15,450, $30,850, and $23,150, respectively, if the TCJA instead continued.
Most relatively simple estates (cash, publicly traded securities, small amounts of other easily valued assets, and no special deductions or elections, or jointly held property) do not require the filing of an estate tax return.