IRS Releases 2025 Lifetime Exemption and Annual Gift Exclusion Amounts

The IRS has announced the inflation adjustments for tax provisions for individual taxpayers for the 2025 calendar year through Revenue Procedure 2024-40. Below are key updates from the IRS as it relates to estate, gift, and generation-skipping transfer taxes:

1. Estate, Gift, and Generation-Skipping Transfer Tax Exemption: The exemption amount for 2025 will be $13,990,000, an increase from the 2024 amount of $13,610,000. This means individuals can transfer up to this amount without incurring federal estate, gift, or generation-skipping transfer taxes.

2. Annual Gift Exclusion: The annual exclusion for gifts is increased to $19,000 for the 2025 calendar year, up from $18,000 in 2024. This allows individuals to gift up to $19,000 per recipient without incurring gift tax or using up their lifetime exemption.

These adjustments are part of the IRS’s annual inflation adjustments for various tax provisions, which reflect changes in the cost of living.