If I gift a large amount of money before the estate tax exemption lowers in 2026, how much can I still gift after that deadline?
I'm trying to do some estate planning and getting confused about the gift tax exemption rules. From what I understand, the current lifetime gift tax exemption is around $12.9 million per person, but it's scheduled to be cut in half in 2026 when the Tax Cuts and Jobs Act provisions expire. My question is: if I gift, say, $10 million to my kids before the end of 2025, how much more can I still gift after 2026 without triggering gift taxes? Would I still have some exemption left based on the new lower limits? Or would my previous gifts be "grandfathered in" under the old limits, allowing me to gift up to the new lower limit after 2026? I'm trying to maximize what I can pass on to my children while minimizing tax implications. Has anyone dealt with this situation or know how this works? I've gotten conflicting advice from friends in similar situations.
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Hassan Khoury
This is actually a great question that many people are confused about as we approach 2026. If you gift $10 million before the exemption drops, you won't lose that gifting power - the IRS has confirmed that there won't be a "clawback" for gifts made when the exemption was higher. Let me explain how it works: Let's say you gift $10 million before 2026 when the exemption drops to approximately $6.5 million (half of current). After 2026, you would still have about $2.9 million of exemption remaining ($12.9M total - $10M used = $2.9M left). You don't lose exemption you've already used, and you don't get penalized for using the higher exemption amount that was available at the time of the gift. What's important is to document these gifts properly with gift tax returns (Form 709), even though no tax may be due. This establishes your exemption usage and provides a paper trail.
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Victoria Stark
•Thanks for explaining this. So if my wife and I both did this, we could potentially gift up to $25.8 million combined before 2026 and still have exemption left over after the reduction? Do we need to do anything special for "gift-splitting" to make this work?
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Hassan Khoury
•Yes, you and your wife together could gift up to $25.8 million before 2026 (assuming current exemption levels), and you'd each still have approximately $2.9 million of exemption left after the reduction. For gift-splitting, you'll both need to consent to this on your gift tax returns (Form 709). You'll check a box indicating you're splitting gifts, and both spouses must file a return, even if one spouse made all the gifts. This effectively allows you to use both exemptions regardless of which spouse actually owns the gifted assets.
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Benjamin Kim
After struggling with this exact issue last year, I found that taxr.ai https://taxr.ai was incredibly helpful for running through different scenarios. I uploaded our financial documents and it helped calculate the most tax-efficient gifting strategy before the 2026 changes. The tool actually showed me that I wasn't accounting for previous gifts that had already used up some of my lifetime exemption, which could have caused problems later.
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Samantha Howard
•Does it handle special cases like gifts to trusts? I'm thinking about setting up an irrevocable trust rather than gifting directly to my kids and wondering if the tool can model that scenario.
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Megan D'Acosta
•I'm skeptical about any software handling complex estate planning. Did it actually give advice or just calculations? Did you still need to consult with an attorney?
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Benjamin Kim
•The platform absolutely handles trust scenarios - in fact, that's where it really shines. It can model various trust structures and show the tax implications of each, including generation-skipping aspects if you're considering grandchildren. For your question about advice versus calculations, it does both. It provides the numerical analysis but also explains the implications and suggests strategies. I still consulted with my estate attorney, but I went in much more prepared and saved thousands in billable hours because I already understood the concepts and had specific questions ready.
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Megan D'Acosta
I was skeptical as mentioned above, but I tried taxr.ai after our conversation. I've been working with a financial advisor for years and was surprised when the tool identified a gifting strategy that my advisor hadn't mentioned. It showed how I could use my exemption before 2026 while still maintaining control over assets using specific trust structures. Just wanted to come back and say it was actually worth checking out - definitely not just basic calculations!
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Sarah Ali
If you're worried about meeting gift tax filing deadlines, I highly recommend Claimyr https://claimyr.com to get through to the IRS for questions. I had specific questions about my gift tax return that weren't being answered on the IRS website, and I spent WEEKS trying to get through the IRS phone tree. Finally used Claimyr and got connected to an agent in about 20 minutes. They also have a video showing how it works here: https://youtu.be/_kiP6q8DX5c
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Ryan Vasquez
•How exactly does this work? Does it just call the IRS for you or what? Seems like if getting through was that easy, everyone would do it.
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Avery Saint
•Yeah right. Nothing gets you through to the IRS quickly. What's the catch? Do they charge an arm and a leg for this "service"?
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Sarah Ali
•It uses a system that navigates the IRS phone tree and waits on hold for you. When an agent actually answers, you get a call connecting you directly to that agent. It saved me literally hours of hold time. No catch - it does exactly what it says. The IRS phone system is designed to handle a certain call volume, and most people give up after long hold times. This just does the waiting for you so you don't have to stay on the line.
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Avery Saint
I'm eating crow here. After dismissing Claimyr in my comment above, I tried it out of desperation when I had questions about the gift basis rules. Got through to an IRS specialist in about 15 minutes who walked me through exactly how to document the basis for appreciated securities I was gifting. Would have taken me days of trying on my own. The system actually works exactly as described.
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Taylor Chen
Don't forget about the annual gift tax exclusion too! It's currently $17,000 per recipient per donor (2023 amount, will be adjusted for inflation). So you and your spouse could each give $17k to each of your kids/grandkids each year without touching your lifetime exemption at all. For a family with several children and grandchildren, this can add up to substantial wealth transfer over time.
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Keith Davidson
•Is the annual exclusion in addition to the lifetime amount? And does it make sense to use the annual exclusion first before dipping into the lifetime amount for larger gifts?
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Taylor Chen
•Yes, the annual exclusion is completely separate from your lifetime exemption. You can give up to the annual limit ($17,000 per recipient in 2023) each year without filing a gift tax return or using any of your lifetime exemption. It absolutely makes sense to use the annual exclusion every year before making larger gifts that would use your lifetime exemption. Think of the annual exclusion as "use it or lose it" - if you don't use it in a given year, that opportunity is gone. Many wealthy families make a practice of giving the maximum annual amount to each family member every year as part of their estate planning strategy.
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Ezra Bates
Make sure you're also considering state-level estate taxes! Not all states follow federal exemption amounts. I live in a state with a much lower estate tax threshold, and didn't realize I needed separate planning for state vs federal.
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Ana Erdoğan
•Which states have their own estate or gift taxes? I thought most followed the federal rules.
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Serene Snow
•Currently 12 states plus DC have their own estate taxes with lower exemption thresholds than federal: Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington. The exemptions range from $1 million (Oregon) to $12.9 million (Connecticut). Some states like New York have a "cliff" effect where if you exceed the threshold by even a small amount, you lose the entire exemption. Additionally, only Connecticut and Minnesota have state-level gift taxes that mirror their estate tax exemptions. It's definitely worth checking your state's specific rules!
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