Estate and Gift Tax Exemptions and Possible Changes Ahead
For 2025, the gift and estate tax exemptions have increased to $13.99 million, compared to $13.61 million in 2024. For married couples, the amount is $27.98 million.
On January 1, 2026, according to a provision in the Tax Cuts and Jobs Act of 2017, the exemption amount is set to automatically revert back to the 2017 amount ($5.49 million) with inflation adjustments for the intervening years (estimated to be about $6.5 million) unless tax law changes are enacted in the coming year.
QCDs Get Inflation Boost in 2025
Qualified charitable distributions (QCDs) of up to $100,000 annually from IRAs have been available for donors since the Pension Protection Act of 2006. With a QCD, eligible donors age 70½ or older have been able to avoid income tax they would have otherwise paid on required minimum distributions (RMDs).
Beginning in 2023, donors could make a one-time election to fund a charitable gift annuity or charitable remainder trust with up to $50,000 from an IRA. Payments can be made only to the donor and/or spouse.
As part of the Secure 2.0 Act of 2022, both the QCD limit and the amount eligible for gift annuities and remainder trusts are adjusted for inflation. For 2025, the QCD maximum is $108,000, and the amount eligible for gift annuities and remainder trusts is $54,000.
A Higher RMD Can Mean More Taxes
With all the major financial markets enjoying record highs, RMDs have increased for many Americans. One tax strategy for those 73+ is to make QCDs, which can count towards your required distribution for 2025 and are not considered part of your taxable income.
Gift Annuity Rates Rise—Highest Payment Rates in 17 Years
The American Council on Gift Annuities issued new recommended payout rates, effective January 1, 2024. The higher rates range generally from 5.7% (age 65) to 10.1% (90+) for one-life annuities. Check with us for a complimentary illustration based on one or two lives.
