In 2017, Congress enacted the Tax Cuts and Jobs Act (TCJA), which doubled the estate and gift tax exemption. Due to congressional cost requirements, this increase is set to expire on Jan. 1, 2026, reverting to pre-TCJA levels, indexed for inflation.
The Internal Revenue Code sets forth how much taxpayers may transfer during their lifetime or at death without incurring federal gift or estate taxes. This threshold is known as the Basic Exclusion Amount (BEA). Gifts to non-spouse donees reduce a taxpayer’s available BEA, while any remaining BEA at death can shield assets from estate taxes. Transfers exceeding the BEA are subject to gift or estate taxes, with rates ranging from 18% to 40%.
