2025 Is Your Last Chance for Tax-Free Gifting at Historic Levels

The federal gift and estate tax is a tax on assets you pass on, either during your lifetime or after death. Right now, thanks to inflation adjustments, individuals can pass on up to $13.61 million tax-free in 2025. For married couples, that amount doubles to $27.22 million. These are the highest exemption levels in history.

But this window won’t last. Starting January 1, 2026, the exemption is scheduled to fall back to around $7 million per person unless Congress acts. That’s because key parts of the 2017 Tax Cuts and Jobs Act are set to expire. For families with significant assets—real estate, investments, or a business—this change could trigger a large estate tax bill, with rates as high as 40%.

Many high-net-worth families are acting now to take advantage of the current limits. The IRS has made it clear that gifts made under today’s exemption won’t be “clawed back” after the exemption drops. That makes now a prime time to gift assets or transfer them using strategic tools like irrevocable trusts.

Another option is to use the annual gift tax exclusion, which lets you give up to $18,000 per person in 2025 ($36,000 for married couples) without dipping into your lifetime exemption.

If your estate is close to or over the expected 2026 limit, this isn’t something to put off. Talk to your financial advisor and estate planning attorney about how much you can give now, what strategies might be right for your situation, and how to protect your wealth for future generations.

The current exemption offers a rare opportunity to transfer significant assets tax-free. Acting before 2026 could save your family millions.