When the Tax Cuts and Jobs Act of 2017 was passed, the federal estate and gift tax burden reduction for millions of Americans continued. Although there is no way to know exactly what will happen in Congress in the upcoming year, the current law’s advantageous tax benefits will sunset in 2025, and the amounts will revert to their previous levels.
What might this mean for you?
Reviewing your plans and considering making some changes may make sense when legislative uncertainty exists.
• The current amount that can be left to heirs free of federal estate and gift taxes is $13.99 million for single individuals and $27.98 million for married couples.
• Because of the sunset provision, federal estate and gift tax amounts are scheduled to revert to previous levels on January 1, 2026. Adjusted for inflation, the exemption for a single taxpayer is estimated to be around $7 million.
• Other changes include lower standard deduction amounts, higher individual income tax rates, lower Alternative Minimum Tax thresholds and more.
Changes in cash deductions
Since without congressional action the deduction allowance for charitable gifts of cash will revert at sunset to 50% of adjusted gross income (AGI) from the current rate of 60% of AGI, you may want to consider making your charitable gifts in this way now and possibly enjoy more tax savings. You can make a gift of any amount to the Boys and Girls Clubs of East County Foundation with a check, a credit card or an electronic transfer.
For more information
By thinking through the potential upcoming changes, you can adjust your plans so they are the most beneficial to you and your loved ones. As always, contact your advisors for more information. If you would like to discuss the charitable aspects of your plans, please contact Forrest Higgins at 619-440-1600 or forrest@bgcec.org.