The lifetime estate and gift tax provisions in the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025. This law limits taxes on transfers of money, assets, or estates given after death. Unless Congress makes the change permanent, the current exemption will be cut in half and will revert to the 2017 levels. The current law allows individuals to transfer over $13.5 million over their lifetime without incurring any federal estate tax. Contributions that exceed this limit are subject to a tax rate of up to 40%! If Congress does not act to extend this Act, you would be taxed on any contributions over $7 million. At 40%, the tax on $7 million dollars is over 3 million dollars!

This provision is relatively straightforward for individuals who wish to gift assets now or after their death. If families do not act before the end of 2025, they could lose millions in tax-free gifts. Another advantage of gifting early is that there is no additional tax if the value of the gift grows by the time of the giver’s death. Talk to a professional to find out what you can do to protect your hard-earned money.

Don’t wait until next year to take action. By then, it might be too late. In the meantime, here is a link to the IRS site on Estate and Gift Taxes.