What's Coming in 2025: The Estate Exemption Hits $13.99 Million as the Sunset Stays on the Calendar

What changed

In Revenue Procedure 2024-40, released October 22, 2024, the IRS published the inflation-adjusted figures for 2025. For estate planning, the key numbers are:

• the basic exclusion amount — the unified estate and gift tax exemption — rises to $13,990,000 per person for 2025, up from $13,610,000 in 2024
• the generation-skipping transfer (GST) tax exemption likewise rises to $13,990,000
• the annual gift tax exclusion increases to $19,000 per recipient, up from $18,000

For a married couple, the combined basic exclusion approaches $28 million in 2025, and a couple can together exclude $38,000 per recipient under the annual exclusion. These are meaningful increases, and they take effect for transfers in 2025.

The fact that has not changed

The inflation adjustment is welcome, but it sits inside a structure that year-end planning cannot ignore. The elevated exemption is a product of the Tax Cuts and Jobs Act, and under current law that elevation is temporary.

Absent legislation, the basic exclusion amount is scheduled to revert after December 31, 2025 — falling, on current projections, to roughly half of its 2025 level once the pre-2018 base is restored and adjusted for inflation. Decedents dying, and gifts made, after that date would be measured against the lower figure. As of the close of 2024, that sunset remains on the calendar.

It would be a mistake to read the rising 2025 exemption as a reason for complacency. The direction of the headline number — up — runs opposite to the direction of the scheduled change in the law — down. The 2025 figure is the high-water mark under current law, not evidence that the tide has turned.

Why this sharpens the case for using exemption now

The interaction of two features makes the planning logic concrete. First, the exemption is at its largest in 2025. Second, that level is scheduled to drop the following year. For families with estates that exceed — or are approaching — the lower post-sunset figure, the 2025 window is when the most exemption is available to use.

The mechanics reward action within the window. Gifts that use exemption while it is high lock in the value transferred out of the estate, and the appreciation on gifted assets accrues outside the estate going forward. A family that uses the larger 2025 exemption captures it; a family that waits past the scheduled sunset may find the available exemption materially smaller.

The disciplined caveat is equally important: this is a current-law assessment as of late 2024. Whether Congress will act on the scheduled sunset is a legislative question, and planning should not assume a particular outcome in either direction. The sound approach is to plan against the law as it actually stands — which today means an exemption that is high in 2025 and scheduled to fall after it — while building flexibility for the possibility that the law changes.

What this means for year-end and early-2025 planning

For families positioned near or above the post-sunset exemption level, several moves deserve attention:

• use the 2025 figures, not the 2024 figures, for gifts made in the new year — the higher exclusion is available beginning January 1
• evaluate larger lifetime gifts that use the elevated exemption while it is at its 2025 peak, recognizing the scheduled reduction the following year
• coordinate GST exemption allocation alongside gift planning, since the GST exemption tracks the same elevated-but-scheduled-to-fall figure
• structure plans with enough flexibility to remain sound whether or not the sunset takes effect as scheduled

For families well below the exemption, the urgency is lower, but the annual exclusion increase still offers a clean, no-exemption-cost way to move value each year.

Key takeaways

• Revenue Procedure 2024-40 (October 22, 2024) sets the 2025 basic exclusion at $13,990,000 per person and the GST exemption at the same figure.
• The 2025 annual gift exclusion rises to $19,000 per recipient.
• Under current law, the elevated exemption is still scheduled to revert after December 31, 2025, to roughly half its level.
• The higher 2025 numbers widen the available window; they do not change the scheduled sunset.

What to do now

1. Use the 2025 figures for new-year gifting.

The higher exclusion and annual-exclusion amounts apply to transfers beginning January 1, 2025.

2. Evaluate larger gifts while the exemption is at its 2025 peak.

For estates near or above the post-sunset level, the window to use the most exemption is now.

3. Build flexibility for the sunset either way.

Plan against current law — high in 2025, scheduled to fall after — without betting on a particular legislative outcome.

Bottom line

The 2025 exemption is the largest it has ever been, and under current law it is scheduled to be the last year at that level. For families with exposure, that combination is the whole case for acting within the window. Use the 2025 figures, weigh the larger gifts, and keep the plan flexible against a sunset that, as the year ends, is still on the calendar.