The Tax Cuts and Jobs Act (TCJA) increased the estate and gift tax basic exclusion amount (BEA) to $10 million from $5 million (adjusted for inflation) for decedents dying and gifts made after Dec. 31, 2017, and before Jan. 1, 2026. However, the BEA is set to revert to $5 million (with adjustments for inflation) in 2026.
Individuals relying on the higher BEA for gifts made before 2026 potentially could be exposed to additional estate tax after the reversion to the lower BEA amount in 2026. Final regulations issued in 2019 provided a special rule to preserve the higher BEA amount for gifts made before 2026. Recently released proposed regulations provide exceptions to the special rule to limit its application to completed gifts.