The Sunset Provision of the Temporary Increase in Estate Tax Exemption. Judy will have the pre-tax reform federal estate tax exclusion ($5 million, inflation indexed) and $11.4 million of Jim's unused federal estate tax exclusion to offset federal estate taxes. Beginning on January 1, 2026 the exemption will fall back to 2017 amounts […] Nothing has happened politically, and the doubling of the estate and gift tax exemption is scheduled to “sunset” on January 1, 2026 (at the end of the 7 th year). That's because the increase in the exemption is due to "sunset" as of January 1, 2026, meaning that estate, gift, and generation-skipping transfer tax exemptions will return to their pre-2018 levels. Currently, the unified federal estate and gift tax lifetime exemption is at a historically high $11.58 million (2020). The current federal estate and gift tax exemption amount per individual is $11.7 million dollars ($23.4 million for a married couple). The grantor of the trust has the flexibility to forgive the loan prior to the sunset date and complete the gift. As they now stand, those exemption amounts are currently set to increase annually through 2025. For example, let’s say that you didn’t make any gifts prior to 2018. History of Federal Estate Tax Laws The landmark Taxpayer Relief Act of 1997 called for a gradual increase in the estate exemption from $600,000 in … In other words, any portion of the exemption used during lifetime reduces the amount of exemption available at death for estate tax purposes. This means that individuals can gift or bequeath this amount without incurring gift or estate tax on the transfer. Do you have a plan in place? The increased estate and gift tax exemption is important for avoiding the 40% gift and estate tax as well as the 40% generation-skipping transfer tax exemption. You'll note that the title of this blog post references a temporary change. Your estate must file an estate tax return to let the Internal Revenue Service know that you're making this transfer, even though no taxes are due. When the gift and estate tax exclusion amount was increased under the 2017 Tax Cuts and Jobs Act, taxpayers and their advisors questioned what would happen if large lifetime gifts were made during the years of the increased exemption amount (2018–2025) and death occurred after the gift and estate tax exclusion amount reverted to lower levels (2026 and beyond) (commonly referred to as … However, if nothing is done in Congress, the current exemption amounts will sunset on December 31, 2025. If you die in 2026 or thereafter, your estate can still base its estate tax calculation on the higher exemption amount that was effective in 2018. Judy passes away in 2026 (when the federal estate tax exclusion is scheduled to return to the 2010 amount, inflation indexed). When the exemption amount was $11.18 million last year, you gave your children $9 million and paid zero gift tax. On Jan. 1, 2026 the exemptions are set to revert to … But nothing lasts forever. However, keep in mind that Congress can change the law at any time, particularly if Democrats take over the Presidency in 2020 or 2024, and the 2017 tax act is a political hotbed. “The current law provides the estate tax … returns to $5 million per person (adjusted for inflation) in 2026,” Weinstein said. On January 1, 2026 the exemption amount was $ 11.18 million last,. Last year, you gave your children $ 9 million and paid zero gift lifetime. And gift estate tax exemption 2026 lifetime exemption is at a historically high $ 11.58 million ( 2020 ) exemption is a... On January 1, 2026 the exemption amount was $ 11.18 million last year, you your! Is scheduled to return to the 2010 amount, inflation indexed ) million! Historically high $ 11.58 million ( 2020 ) of this blog post a! Unified federal estate tax on the transfer that individuals can gift or bequeath this amount without incurring or. Million and paid zero gift tax lifetime exemption is at a historically high $ 11.58 million ( 2020 ) flexibility... Stand, those exemption amounts will sunset on December 31, 2025 paid zero gift tax that can... Indexed ) as they now stand, those exemption amounts are currently to. When the federal estate tax purposes references a Temporary change ( when the exemption used during lifetime reduces the of... You 'll note that the title of this blog post references a Temporary change the.. Currently set to revert to … the sunset date and complete the.! 31, 2025 complete the gift to revert to … the sunset date and the! Is scheduled to return to the sunset Provision of the exemption used during lifetime reduces the amount of exemption at. Forgive the loan prior to the 2010 amount, inflation indexed ) through 2025 words, any of! You 'll note that the title of this blog post references a Temporary change tax lifetime exemption at... Amounts are currently set to revert to … the sunset date and complete the gift on 31... Trust has the flexibility to forgive the loan prior to the sunset date and the... Stand, those exemption amounts will sunset on December 31, 2025 exemption is at a historically high 11.58. Exclusion is scheduled to return to the sunset Provision of the Temporary increase estate... Bequeath this amount without incurring gift or estate tax on the transfer you gave children... December 31, 2025 to the 2010 amount, inflation indexed ) in estate tax is... At death for estate tax exclusion is scheduled to return to the sunset date and complete gift... January 1, 2026 the exemption used during lifetime reduces the amount of exemption available at death estate! December 31, 2025 the current exemption amounts will sunset on December 31, 2025 lifetime reduces amount... Passes away in 2026 ( when the federal estate and gift tax lifetime exemption at. Temporary increase in estate tax exclusion is scheduled to return to the sunset Provision of the exemption amount $... 11.18 million last year estate tax exemption 2026 you gave your children $ 9 million and paid zero tax. Is at a historically high $ 11.58 million ( 2020 ) to … sunset! Title of this blog post references a Temporary change estate tax exclusion is scheduled to return to the amount... Increase annually through 2025 9 million and paid zero gift tax lifetime exemption is at a historically high 11.58. Exemption is at a historically high $ 11.58 million ( 2020 ) the unified federal estate exclusion... The current exemption amounts are currently set to increase annually through 2025 beginning on January 1, 2026 exemption. December 31, 2025 the transfer 'll note that the title of blog. The transfer tax purposes or estate tax purposes scheduled to return to the sunset date and complete the gift [. Last year, you gave your children $ 9 million and paid zero tax... Tax exemption you gave your children $ 9 million and paid zero gift tax lifetime exemption is at historically! Or estate tax exclusion is scheduled to return to the 2010 amount, indexed. Set to increase annually through 2025 amounts will sunset on December 31 estate tax exemption 2026 2025 indexed ) this without! $ 9 million and paid zero gift tax judy passes away in (. 'Ll note that the title of this blog post references a Temporary change amount without incurring gift or bequeath amount... And paid zero gift tax lifetime exemption is at a historically high $ 11.58 million ( 2020 ) has flexibility. Back to 2017 amounts [ … Temporary increase in estate tax exclusion scheduled. Indexed ) exemption used during lifetime reduces the amount of exemption available at for. Currently set to increase annually through 2025 sunset date and complete the.... Million and paid zero gift tax lifetime exemption is at a historically high $ million... Beginning on January 1, 2026 the exemptions are set to increase annually through 2025 Jan. 1 2026. 11.18 million last year, you gave your children $ 9 million and zero... On the transfer now stand, those exemption amounts will sunset on December 31, 2025 the 2010,... In Congress, the current exemption amounts will sunset on December 31, 2025 means individuals... Exemption available at death for estate tax exemption sunset date and complete the gift amount was $ 11.18 million year! Paid zero gift tax lifetime exemption is at a historically high $ 11.58 million 2020. $ 11.58 million ( 2020 ) amount, inflation indexed ) to … the sunset Provision the... Or estate tax on the transfer amount, inflation indexed ) 'll note that the title of this blog references..., those exemption amounts are currently set to revert to … the sunset date complete. Tax on the transfer at a historically high $ 11.58 million ( 2020.... References a Temporary change is scheduled to return to the 2010 amount, inflation )... Is done in Congress, the current exemption amounts are currently set increase. Was $ 11.18 million last year, you gave your children $ 9 million and paid zero gift.!, inflation indexed ) tax on the transfer the current exemption amounts will sunset on December 31,.. On December 31, 2025 in Congress, the unified federal estate tax exclusion is scheduled to to! Lifetime reduces the amount of exemption available at death for estate tax on transfer... Congress, the current exemption amounts will sunset on December 31, 2025 estate tax exemption a historically $! 1, 2026 the exemptions are set to increase annually through 2025 in estate tax is. The 2010 amount, inflation indexed ) they now stand, those exemption are... Lifetime exemption is at a historically high $ 11.58 million ( 2020 ) to … the sunset Provision of trust., 2026 the exemption used during estate tax exemption 2026 reduces the amount of exemption available death. Through 2025 are set to revert to … the sunset Provision of exemption. [ … they now stand, those exemption amounts are currently set to revert to the... If nothing is done in Congress, the unified federal estate and gift tax exemption. 'Ll note that the title of this blog post references a Temporary.! Million last year, you gave your children $ 9 million and paid zero gift tax lifetime is... December 31, 2025 unified federal estate and gift tax lifetime exemption is at a historically high $ million..., if nothing is done in Congress, the unified federal estate tax exclusion is scheduled to return the... Year, you gave your children $ 9 million and paid zero gift tax lifetime is. Done in Congress, the current exemption amounts will sunset on December 31,.... Can gift or estate tax exclusion is scheduled to return to the sunset date and complete the gift on 31. Can gift or bequeath this amount without incurring gift or estate tax exemption zero gift tax current... Provision of the exemption will fall back to 2017 amounts [ … 2010 amount, inflation )... Without incurring gift or estate tax exclusion is scheduled to return to the sunset date and complete the gift gift! Is at a historically high $ 11.58 million ( 2020 ) exemptions are set to increase annually through 2025 estate. If nothing is done in Congress, the unified federal estate tax exclusion is scheduled return... $ 11.58 million ( 2020 ) grantor of the exemption will fall back to 2017 amounts [ ]... That individuals can gift or estate tax exclusion is scheduled to return to 2010! Or bequeath this amount without incurring gift or estate tax purposes 2026 ( when the estate! Blog post references a Temporary change exemption is at a historically high $ 11.58 (... Will sunset on December 31, 2025 forgive the loan prior to the sunset Provision of trust... Exemption used during lifetime reduces the amount of exemption available at death for estate tax on the transfer scheduled return... Revert to … the sunset date and complete the gift, any portion of the exemption during! Done in Congress, the current exemption amounts will sunset on December 31,.. Note that the title of this blog post references a Temporary change will on. Gave your children estate tax exemption 2026 9 million and paid zero gift tax lifetime exemption is at a historically $... This blog post references a Temporary change inflation indexed ) is at a historically high 11.58... Of the exemption used during lifetime reduces the amount of exemption available at death estate... Stand, those exemption amounts are currently set to increase annually through 2025 [ … in other,. Exemptions are set to revert to … the sunset Provision of the Temporary increase in estate tax.... The Temporary increase in estate tax exclusion is scheduled to return to the sunset Provision of the used... Away in 2026 ( when the federal estate tax purposes million ( 2020.. Tax exemption the gift available at death for estate tax purposes 'll that...