2025 Estate and Gift Tax Update

The arrival of 2025 brings with it increased estate and gift exclusion amounts.

For an estate of any decedent dying during calendar year 2025, the Federal applicable exemption will increase from $13.61 million to $13.99 million.  This change increases not only the exemption amount available at death, but also a taxpayer’s lifetime gift exemption amount and generation-skipping transfer (“GST”) tax exemption amount.  This means a husband and wife with proper planning could transfer $27.98 million estate, gift and GST tax free to their children and grandchildren in 2025. If no new tax law is passed this year, the increased exemption amounts are scheduled to expire on December 31, 2025, which would mean a reduction in the exemption amounts to $5 million plus adjustments for inflation.

While the estate, gift and GST tax rate remains the same at 40%, the gift tax annual exclusion increased from $18,000 in 2024 to $19,000 in 2025.

The gift tax annual exclusion to a non-citizen spouse increased from $185,000 to $190,000.  While gifts between spouses are unlimited if the donee spouse is a United States citizen, there are restrictions when the donee spouse is not a United States citizen.

The New York basic exclusion amount was changed as of April 1, 2014 and does not match the federal exclusion amount.  In 2024, the New York basic exclusion amount was $6.94 million, and in 2025, it increased to $7.16 million.  It is important to note that, unlike the Federal exclusion amount, the New York basic exclusion amount is not portable, meaning if the first spouse to die fails to utilize his or her full exclusion amount, the surviving spouse will not be able to utilize the first spouse to die’s unused New York basic exclusion amount.