With the passage of the “One Big Beautiful Bill” in July 2025, significant changes to federal gift and estate taxes will take effect in 2026. The federal lifetime gift and estate exemption introduced under the 2017 Tax Cuts and Jobs Act (TCJA) was set to sunset at the end of 2025; however, the “One Big Beautiful Bill” eliminated the sunset and made the federal lifetime gift and estate exemption permanent at $15 million per individual. In subsequent years, the federal lifetime gift and estate exemption will be indexed for inflation. The permanent change to the federal estate and gift tax exemption at $15 million per individual with an index for inflation is significant and allows for married couples to utilize their combined exemptions to pass up to $30 million tax-free.
Annual Gift Exclusion for 2026
The annual gift exclusion will remain at $19,000 in 2026 and is expected to continue rising with inflation. This exclusion allows individuals to make smaller gifts without affecting their overall exemption.
Gifts Excluded from Gift Tax
There are certain payments that are entirely excluded from gift tax, regardless of the amount which also do not count against your annual or lifetime exemptions. They include:
- Payments for tuition made directly to a qualifying educational institution on behalf of a student;
- Payments for medical expenses made directly to a medical provider or insurance company for another person’s medical care;
- Gifts to a spouse (unlimited to US citizen spouses and subject to an annual exclusion for non-US citizen spouses);
- Gifts to qualified charitable organizations; and
- Gifts to political organizations.
Final Thoughts
With the changes to gift and estate tax laws establishing the permanent federal lifetime gift and estate exemption at $15 million per individual, individuals and couples are able to pass significant assets without a gift tax. Even so, to take full advantage of current tax laws, it’s necessary to review and possibly update your estate plan. For more details or personalized advice, contact our experienced estate planning attorneys today.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney client relationship between you and Grissom Law, LLC.