Estate tax exemption sunset: Bright ideas for charitable giving

by Sarah Baker, Senior Financial Planner at Mason Investment Advisory Service

The days may be getting longer as the season heads into summer, but a sunset is coming where the estate tax exemption is concerned. You’re likely already talking with your clients about the changes scheduled to be triggered when January 1, 2026 rolls around. This is the date that the gift and estate tax exemption–the total amount a taxpayer can leave to family and other beneficiaries during their life and at death before the hefty federal gift and estate tax kicks in–is scheduled to drop, rather precipitously.

For 2024, the estate tax exemption is $13.61 million per individual, or $27.22 million per married couple, an increase over 2023 thanks to adjustments for inflation. Later this year, the IRS will issue inflation adjustments for 2025. For 2026, the exemption is scheduled to fall back to 2017 levels, adjusted for inflation, which would roughly total $7 million per person. That is quite a drop!

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