Estate & Gift Tax Changes for 2025
1) Federal Estate Tax Exclusion is now $13,990,000: As of January 1, 2025, the federal gift and estate tax exclusion amount has increased to $13,990,000 ($27,980,000 for a married couple). CAUTION: The federal transfer tax exclusion amount is currently scheduled to decrease to $5,000,000 adjusted for inflation if the current law in 2025 of the current law is not extended by Congress
2).Annual Gift Exclusion Increases to $18,000: As of January 1, 2025, the federal gift tax annual exclusion amount (i.e., the amount that an individual can annually transfer to another individual without using any lifetime gift tax exclusion or paying any gift tax) remains at $18,000 ($36,000 for a married couple).
3) Federal Estate Tax Portability between Spouses: The ability to transfer a decedent’s unused federal estate tax exclusion amount to the decedent’s surviving spouse by filing a federal estate tax return (often referred to as “portability”) remains in effect for 2024. This means a married couple can use the full $27.98 million exemption before any federal estate tax would be owed. To make a portability election, a federal estate tax return must be timely filed by the executor of the deceased spouse’s estate.
4) New York Estate & Gift Tax Despite the large Federal Estate Tax exclusion amount, New York State’s estate tax exemption for 2025 was $7.16 million. New York State still does not recognize portability between spouses. As a result each spouse has the full exemption amount but cannot pass on their unused portion to their surviving spouse as federal law permits. It is also important to note, NY has no gift tax at this time. However, New York does have a three-year lookback or “claw back” on gifts as of January 16, 2019.