Estate and Gift Tax Exemptions are at an all-time high until the end of 2025. That may seem like a long way off, but setting things up could take longer than expected
By Christopher F. Tate, J.D. – Kiplinger Financial Reports
Since it was enacted, we’ve been aware of the Tax Cuts and Jobs Act’s built-in “sunset” date of December 31, 2025. Come the first day of 2026, almost all of the legislation’s significant changes to tax-related provisions will revert to what existed before the TCJA was passed in 2017. At that time, the sunset date seemed far off. Now, in 2024, it is rapidly approaching. The time to plan for the sunset is now — let’s break down what is at stake.
Federal estate, gift and generation-skipping transfer (GST) tax considerations
The Tax Cuts and Jobs Act’s changes to these tax provisions were fairly narrow in description but broad in application. The Internal Revenue Code established that a tax must be paid when asset transfers are made during life (the gift tax), after death (the estate tax), or to an individual two or more generations below the donor’s (the generation-skipping transfer tax). The tax imposed for all three is a flat 40% and must be paid either when a taxpayer files a gift tax return (for the gift tax and, sometimes, the GST tax) or when the estate of a decedent files the federal estate tax return (for the estate tax and, sometimes, the GST tax).