5 Proven Strategies to Maximize Your Gift Tax Exemption (Before the 2026 Reduction)

Big Changes to Gift Taxes Are Coming in 2026 – Here’s What You Need to Know

What’s Happening

Right now, you can give away up to $12.92 million in your lifetime without paying gift taxes (or $25.84 million for married couples). This big limit comes from a 2017 law called the Tax Cuts and Jobs Act (TCJA). But at the end of 2025, that law expires, and the gift tax limit will drop to around $7 million for individuals and $14 million for married couples.

Why This Matters

If you don’t use the current high limit before 2026, you might have to pay a 40% tax on any gifts or wealth you transfer over the new lower limit. This means if you plan to give large sums of money or valuable assets to your family or loved ones, you could save a lot of money by acting now.

 What You Can Do Before 2026

 1. Give Away More Now: If you plan to give a large gift, doing it before 2026 lets you take advantage of the higher limit. This could help you avoid millions of dollars in taxes.

2. Focus on Assets That Will Grow: It’s smart to give away things that will increase in value, like stocks or property. This keeps any future growth outside your taxable estate, so your loved ones won’t face big taxes later.

3. Use Trusts: You can use tools like trusts to give money or assets to your spouse or children while keeping some control. This can help you protect your finances while still lowering your taxable estate.

4. Spread It Out: You can also give smaller gifts each year (up to $17,000 per person without paying gift taxes). Over time, these smaller gifts add up and help reduce your taxable estate.

Why You Shouldn’t Wait

Estate planning takes time, and many people will be rushing to act before 2026. Estate planners, accountants, and lawyers will get very busy, so it’s a good idea to start now. Acting early will give you more time to make smart decisions about how to pass on your wealth without losing large amounts to taxes.

Conclusion

If you expect to have more than $7 million in assets, now is the time to think about how to protect your wealth. By making gifts before 2026, you can lock in today’s high tax-free limits and help your family avoid big taxes in the future. Reach out if you would like to have a preliminary conversation on how best to proceed.

Compiled by Doug Greenberg, President of Pinnacle Wealth Advisory.