![]() ![]() The IRS has provided clarity on how significant gifts will be accounted for prior to 2026 when a death occurs in 2026 or later. In 2026, the estate and gift exemption will revert back to pre-TCJA levels, effectively reduced by half, and is expected to be in the ballpark of $6.8 million per individual, or close to $14 million for a married couple.įor individuals with a taxable estate above $13 million, or families with taxable estates above $24 million, it’s important to shore up your estate plans and, where possible, take advantage of the current high exemption amount using estate and gifting strategies. For 2023, the federal estate and gift tax threshold is $12.92 million per individual and $25.84 million for couples. The TCJA doubled the 2011 estate and gift tax exemption of $5 million, which is adjusted by inflation to slightly over $11 million for single filers and $22 million for couples. For this demographic, it’s no wonder that estate taxes have quickly risen to the top of their concerns. Boomers, the first generation of retirement savers, have grown their wealth substantially over the years through skyrocketing home values, employment stock options, inheritances, and sales of businesses. What expires with the sunset? Here are the most notable sunset provisions Estate and gift taxįor many individuals with larger estates, including high-net-worth and ultra-high-net-worth baby boomers, the sunset of the current estate and gift tax provisions provides the greatest gloom. Because without additional policy changes, the tax year of 2026 could be a big shock to many U.S. With this great sunset looming, Americans should better understand the implications of the expiring tax cuts and begin to think more urgently about their estate and income tax planning. In just a few short years, many high-net-worth Americans might be surprised by the possibility of a larger estate tax liability as well as other significant tax changes as favorable provisions enacted by the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire, or “sunset,” at the end of 2025.Īlong with other tax cuts, the TCJA provided 10 years of estate and gift tax relief through an elevated exemption that is now nearly $13 million per individual, but will be reset to an estimated $6 million in 2026.
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