2025 Gift Tax Exclusion Figures

Every year, the Internal Revenue Service (IRS) announces new limits for the gift tax exclusion, the lifetime gift and estate tax exemption, and the limit on gifts to a non-US citizen spouse. Each change brings a shift in how those with higher net worths can achieve their financial goals. Many of our clients, for example, are looking for ways to pass on their wealth while suffering as few tax penalties as possible. The new IRS figures are directly linked to this goal, and by understanding the new limits, you can better position yourself to provide for your loved ones in the long-term future.  

What is the Gift Tax Exclusion?

The gift tax exclusion refers to an amount of money that each person can legally gift another person over the course of one year without being taxed. Typically, a large cash gift would require the giver to report the money for tax purposes, and a significant chunk of the gift would go toward a government tax. The receiver would therefore end up with less money than the giver originally intended, once the government collected its required taxes.

For 2025, IRS has announced an increase in the gift tax exclusion. In 2024, each individual could gift up to $18,000 tax-free, but in 2025, the limit is now up to $19,000. For married couples, the amount is now $38,000 per year, per recipient. This means that every married couple can transfer $38,000 to each of their children in 2025 without suffering any tax penalty.

What is the Lifetime Gift and Estate Tax Exemption?

The IRS also limits the amount of money that a taxpayer can gift over the course of his or her life. As of 2025, the lifetime gift tax exemption is $13.99 million. Any portion that an individual uses of this $13.99 million reduces the amount that the person can use for his or her estate tax (i.e., the more a person uses from their gift tax exemption, the less he or she can leave behind untaxed at his or her death).

Of note, this $13.99 million figure that the IRS released for 2025 is supposedly temporary. The US government has stated that after 2025, the exempted amount will go down to $5.49 million, with adjustments for inflation.

How Does the IRS Limit Gifts to Non-US Citizen Spouses?

Another way the IRS regulates an individual’s monetary gifts is by setting limits on how much one spouse can give their husband or wife who is not a US citizen. Typically, spouses can exchange money without incurring any tax penalties, but if one spouse is not a citizen, only the first $190,000 of gifts to the non-US citizen spouse is not included in the total amount of the couple’s taxable gifts.

This is because individuals without citizenship could be exempt from the typical US estate tax. When both individuals are citizens, any money above the spouses’ combined estate tax exemption ($13.99 million + $13.99 million, or $27.98 million) will be taxed when both spouses have died. It therefore does not matter to the IRS if the spouses exchange money back and forth, since they will both be taxed on the money at some point anyway. But if one spouse is potentially exempt from this estate tax, the non-US citizen spouse could amass wealth that the IRS is unable to tax. The IRS therefore caps gifts to non-US citizen spouses to keep people from avoiding estate taxes.

Why Do These Limits Matter?

The new figures from the IRS matter for several reasons. To start, they are important to note for clients who want to pass on their wealth as efficiently as possible, avoiding tax penalties along the way. If you can afford to give $19,000 to your child in 2025, for example, gifting this amount will help your child avoid incurring a tax on these same monetary assets when you die.

The figures also hold weight for individuals thinking about their estate plans. For those wanting to meet this $13.99 million figure, time is limited, and it is worthwhile to speak with a Boulder estate planning attorney as soon as possible to figure out how to lock in the higher figure. For those with a spouse who is not a US citizen, it is helpful to consult an attorney that can help you think through how to ensure both spouses’ long-term economic success.

It is prudent to update your estate plan after every major life event, or every three to five years if you do not experience a change in life circumstances. These 2025 IRS figures are part of the reason it is smart to make sure your estate plan is updated, so that you can account for these shifts as you make plans for the future.

Do You Need a Boulder Estate Planning Attorney by Your Side?

As the estate planning landscape continues to change, so do best practices for your estate planning process. At the Braverman Law Group, one of our focus areas is staying abreast of any changes in the law so that we can best advise our clients on how to proceed. In this day and age, it can be tempting to use the internet for fast facts or for legal advice, but from our perspective, there is no replacement for personalized, experience-based, thoughtful legal services that have your best interest in mind.

If you need a Boulder estate planning attorney by your side, consider our Boulder Valley firm. We believe that each estate plan demonstrates the testator’s love and thought and care, and we are committed to providing personalized legal counseling for our clients throughout Colorado. Our experience, empathy, and commitment to excellence give our client community peace of mind when they need it the most.

For a free, no-obligation consultation with one of the Boulder estate planning attorneys at our firm, give us a call today at (303) 800-1588. If you prefer, you can also fill out our online form to tell us about your legal issue and have a member of our team reach back out to you as soon as possible. Our firm covers estate planning, trust administration, special needs planning, Medicaid planning, and more.