The Tax Cuts and Jobs Act that was passed in December of 2017 made changes to both gift and estate taxes. These changes did not repeal gift and estate taxes, rather the exemptions on these taxes were raised, which in turn reduced the number of taxpayers subject to them.

A gift tax exclusion permits you to make annual gifts without incurring gift tax liability. Currently, the limit is $17,000 per recipient. There is also a lifetime gift tax exemption that is set at $12.92 million per person. This means, in addition to the annual exclusion, you may give up to $12.92 million in lifetime gifts, and not incur any gift tax liability. Anything above the $12.92 million exemption will be subject to a tax rate of up to 40% that would be paid by you, the giver, and not the recipient of the gift. Keep in mind though, any lifetime gifts you make will reduce your federal estate tax exemption by the value of the lifetime gifts.

It is important to remember however that many of the changes that became effective at the end of 2017 will expire at midnight on January 1, 2026. This will drop the current federal gift tax and federal estate tax exemption from $12.92 million in net assets per person back down to $5 million.