2025 Tax Changes—Many Made Permanent
As a result of the One Big Beautiful Bill Act (OBBBA) signed into law on the 4th of July, many of the provisions of the TCJA like the expanded standard deduction amounts and individual tax rate reductions that were scheduled to sunset at the end of 2025 were extended temporarily or made permanent in future tax years.
OBBBA also permanently increased the estate and gift tax exemption to $15 million per person ($30 million for married couples) beginning in 2026. The current gift and estate tax exemption amount is $13.99 million for individuals and $27.98 million for married couples. In future years, the exemption will be indexed for inflation annually, like individual income tax rates.
For 2025 and through the 2028 tax year, seniors 65 and older with incomes up to $75,000 ($150,000 for couples) will also receive a “bonus” deduction of $6,000. Limitations apply for those with higher incomes.
Cash gifts remain deductible up to 60% of AGI for 2025 for those who itemize. Taxpayers with higher incomes may be affected by slight adjustments.
QCDs Get Inflation Boost in 2025
Qualified charitable distributions (QCDs) of up to $100,000 annually from IRAs have been available for donors since the Pension Protection Act of 2006. With a QCD, eligible donors age 70½ or older have been able to avoid income tax they would have otherwise paid on required minimum distributions (RMDs).
Beginning in 2023, donors could make a one-time election to fund a charitable gift annuity or charitable remainder trust with up to $50,000 from an IRA. Payments can be made only to the donor and/or spouse.
As part of the Secure 2.0 Act of 2022, both the QCD limit and the amount eligible for gift annuities and remainder trusts are adjusted for inflation. For 2025, the QCD maximum is $108,000, and the amount eligible for gift annuities and remainder trusts is $54,000.
A Higher RMD Can Mean More Taxes
With all the major financial markets enjoying record highs, RMDs have increased for many Americans. One tax strategy for those 73+ is to make QCDs, which can count towards your required distribution for 2025 and are not considered part of your taxable income.
Gift Annuity Rates Rise—Highest Payment Rates in 17 Years
The American Council on Gift Annuities issued new recommended payout rates, effective January 1, 2025. The higher rates range generally from 5.7% (age 65) to 10.1% (90+) for one-life annuities. Check with us for a complimentary illustration based on one or two lives.
