The 2017 Tax Act temporarily doubled the gift and estate tax exemptions, indexed for inflation**. Today the exemptions total $13.61 million per individual and $27.22 million for married couples. The substantial increase provides breathing room for many families, dramatically reducing the number of estates subject to federal estate taxes.
*Assuming a 3% inflation adjustment. 2026 exemptions assume no extension by Congress.
Unless a new law is passed before January 1, 2026, the gift and estate tax exemptions will revert to the basic exclusion amount of $5 million, adjusted for inflation. The potential sunset of the enhanced exemptions could impact individuals and families with significant assets, potentially exposing a larger portion of their estates to taxation.
For example, a married couple with $25 million has zero current estate tax liability. Yet upon sunset, when the exemption reverts to an estimated $7.2 million per person, over $10 million would be exposed. This would trigger an approximate $4 million tax liability.
Consider leveraging today's exemption amount using gifting strategies that align with your wealth objectives.
**The same holds true for the Generation-Skipping Transfer Tax exemptions – $5MM in 2011 dollars temporarily doubled via the Tax Act, set to revert upon sunset to the prior amount.
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This material provides information of possible interest to Glenmede’s clients and friends, and does not provide investment, tax, legal or other advice. Any advice in this communication is not intended or written by us to be used, and cannot be used, for the purpose of (i)avoiding penalties that may be imposed by any governmental taxing authority or agency, or (ii) promoting, marketing or recommending to another party any matters addressed herein. Any opinions, recommendations, expectations and/or projections expressed herein may change after the date of publication. Information obtained from third-party sources is assumed to be reliable but may not be independently verified, and the accuracy thereof is not guaranteed. Any potential outcome discussed, including but not limited to performance, legislation or tax consequence, ultimately may not occur due to various risks and uncertainties. Clients are encouraged to discuss any matter discussed herein with their tax advisor, attorney or Glenmede Relationship Manager.
