Total Change In US Estate And Gift Tax By 2025 – IRS Makes It Official

As we get ready for tax season in 2025, it’s important to know which taxes will go up and which will go down. This year, there is good news for people who have to file estate and gift taxes.

What are gift taxes?

According to the Internal Revenue Service (IRS), the gift tax is a tax on giving something to someone else without getting anything in return or getting less than the full value. The tax is due even if the donor doesn’t mean for the transfer to be a gift.

It can be used for things like money, property, loans with no or low interest, sales for less than the item’s appraised value, free or discounted use of property in exchange for profit, and more. The law doesn’t have to be clear about the goal of the action for the IRS to see it as a gift.

Who needs to pay taxes on gift transfers?

There are taxes on gifts, and the person who gives the gift usually has to pay those taxes. People who are getting taxes may offer to pay the difference sometimes, but this should only be done with the permission of a tax expert.

Some gifts are not taxed: gifts to your spouse, gifts to a political organization for their use, gifts that are less than the annual exclusion for the calendar year, and gifts that you pay for someone else’s tuition or medical bills.

What are estate taxes?

From the IRS’s point of view, the Estate Tax is a tax on your right to give away property after you die. It is a list of all the things you own or have an interest in at the time of your death. The items’ fair market value is used, which is not always the price you paid for them or how much they were worth when you bought them.

See also  Only 9 Left: The 1894-S Barber Dime Could Make You a Fortune!

Your “Gross Estate” is the sum of all of these things. The things that can be included are money and securities, real estate, insurance, trusts, annuities, business interests, and other things.

This doesn’t mean that everything you own is taxed, though. You can deduct things like mortgages, other debts, estate administration costs, property that goes to surviving spouses and qualified charities, and other things. The amount you owe in taxes is equal to your gross estate minus these deductions.

Who needs to pay taxes on estate transfers?

People in the US will not file their taxes for either of these reasons, which is good news. The “basic exclusion amount” is the only amount that someone would have to report to the government when it comes to estate and gift taxes.

When it comes to death taxes If the gross estate of a U.S. citizen or resident, plus the value of their adjusted taxable gifts and specific gift tax exemption, is more than the filing threshold for the year of their death (shown in the table below), then an estate tax return must be filed.

This “basic exclusion amount” is any amount less than the tax threshold, which was $13.61 million in 2024. The cost of living has caused this amount to rise, and it is now $13.99 million per person in 2025. But bad news is on the way.

This amount is because of the Tax Cuts and Jobs Act, which was signed into law by former President Donald Trump. It will expire in 2025, so the “basic exclusion amount” will go back to what it was in 2017 ($5,490,000 per person), taking inflation into account.

See also  US Government makes it official – Disability retirees will have to wait to receive their Social Security benefits

Taxes will help pay for programs that have been struggling for years because the federal government hasn’t given them enough money. This may be bad news for some people.

Read Also :- Major change to SNAP benefits announced for good reason – Now it’s official

Note: Thank you for visiting our website! We strive to keep you informed with the latest updates based on expected timelines, although please note that we are not affiliated with any official bodies. Our team is committed to ensuring accuracy and transparency in our reporting, verifying all information before publication. We aim to bring you reliable news, and if you have any questions or concerns about our content, feel free to reach out to us via email. We appreciate your trust and support!

Chiefs focus

ChiefsFocus is a dedicated news writer with extensive experience in covering news across the United States. With a passion for storytelling and a commitment to journalistic integrity, ChiefsFocus delivers accurate and engaging content that informs and resonates with readers, keeping them updated on the latest developments nationwide.

More From Author

Major change to SNAP benefits announced for good reason – Now it’s official

Goodbye to SSI Payments – List of Retirees Who Will No Longer Receive From Social Security Benefits

Leave a Reply

Your email address will not be published. Required fields are marked *