Private Clients Alert: 2025 Inflation Adjustments

This client alert summarizes the 2025 inflation adjustments relating to gift, estate and generation-skipping transfer (“GST”) tax exemptions, annual exclusion gifts and qualifying charitable distributions from IRAs.

Of particular note is a $380,000 increase in each of the federal gift, estate and GST tax exemptions, bringing each exemption to $13.99 million. While these historically high exemptions are scheduled to be reduced by roughly half on January 1, 2026, future legislation could postpone the scheduled reduction or otherwise modify the gift, estate and GST tax regimes.

Clients who have not already used their full gift and GST tax exemptions may wish to consider the gift planning techniques described in our January 2023 Overview of Lifetime Gift and GST Tax Planning. 

We recommend that clients who are interested in utilizing their gift and GST tax exemptions call us to discuss gift-giving opportunities at their earliest convenience.

Annual exclusion gifts

The annual exclusion for 2025 is increasing from $18,000 per donee to $19,000 per donee (or $38,000 per donee for married couples who split gifts).

For gifts to a non-citizen spouse, the annual exclusion is increasing from $185,000 to $190,000.

As always, we recommend that annual exclusion gifts be made early in the calendar year.

Federal gift, estate and GST tax exemptions

As noted above, the Federal gift, estate and GST tax exemptions are increasing in 2025 from $13.61 million to $13.99 million ($27.98 million for married couples who split gifts).

New York estate tax exemption

New York State has not released the 2025 estate tax exemption amount but, as a reminder, the exemption amount in 2024 is $6,940,000 and will be indexed for inflation in 2025. 

New York does not have a gift or GST tax.

Connecticut gift and estate tax exemptions

The Connecticut gift and estate tax exemptions are increasing to match the 2025 Federal gift and estate tax exemptions.

Qualified Charitable Distribution

For clients who are 70 ½ or older, the maximum amount that can be distributed as a “qualified charitable distribution” (a non-taxable transfer directly from an IRA to a qualified charity) is increasing from $105,000 to $108,000 and will continue to be indexed for inflation in future years.