2025 Inflation Adjustments to Estate, Gift, and GST Tax Exemptions: Why Now Is the Best Time to Do Your Estate Planning

The IRS has just released the new inflation-adjusted exemption amounts for estate tax, gift tax, and generation-skipping transfer (GST) tax for 2025, and they’re higher than ever. But time is running out to take full advantage of these generous exemptions before they decrease in 2026. Let’s break it down.

What are the new numbers?

• Estate, Gift, and GST Tax Exemption Amount: $13,990,000
• Annual Gift Tax Exclusion: $19,000

These figures mean that, as of 2025, you can pass on up to $13,990,000 to your heirs or give away that much in gifts during your lifetime without paying federal estate or gift taxes. On top of that, you can gift up to $19,000 per person per year without using any of your lifetime exemption.

Why does this matter?

This is significant because it allows you to transfer a substantial amount of wealth—either during your lifetime or after death—tax-free. For families with larger estates, this means more wealth goes to loved ones and less to taxes. But here’s the catch: this window of opportunity is closing.

The 2026 Deadline: Changes Are Coming

The Tax Cuts and Jobs Act (TCJA), which doubled the exemption amounts, is set to sunset on January 1, 2026. If no legislative action is taken, the exemption will revert to approximately half of the current amount. That’s a huge decrease, meaning far more estates will become subject to federal estate taxes if no action is taken before the deadline.

What should you do?

The clock is ticking. If your estate might exceed the post-2025 exemption limits, now is the time to act. Consider consulting with a tax specialist regarding your gift tax exemption to transfer wealth during your lifetime. Or explore other irrevocable trust options with both a tax specialist and an estate planning attorney to preserve wealth for future generations.

Proactive estate planning can help you make the most of these higher exemption amounts and minimize your tax burden before the rules change. Consulting with a team of financial advisors, tax specialists, and estate planning attorneys will ensure you’re maximizing your wealth transfer strategy.

In Conclusion

These new numbers represent a significant opportunity for families and individuals to pass on wealth without facing hefty tax bills. But with the exemption amounts set to drop in 2026, now is the time to review your estate plan and make any necessary changes.

Whether you’re considering setting up a trust or updating your current estate plan, it’s important to act sooner rather than later. Give us a call at Shea Law and get your estate plan in order today to take full advantage of these higher thresholds before they potentially shrink.