How It Works
Each gift you make above the annual gift tax exclusion (currently $19,000 per recipient per year) reduces your remaining lifetime exemption dollar for dollar. You file IRS Form 709 to report it, but no tax is due until the exemption is exhausted. At death, anything left of the exemption shelters your estate.
Is the Exemption Going to Drop?
No. The exemption was once scheduled to be cut roughly in half after 2025, but the One Big Beautiful Bill Act, signed July 4, 2025, made the higher exemption permanent. For 2026 it stands at $15 million per person and rises with inflation each year. Married couples with large estates may still use strategies like SLATs, GRATs, and dynasty trusts to plan ahead, but the old cliff is gone.
Arizona Probate Claims Backdrop
Lifetime gifts can affect the size of the probate estate later subject to A.R.S. 14-3104 creditor claims, so timing matters.
For the broader picture — how the lifetime exemption fits with annual exclusion gifts, portability, and the GST tax — read our pillar guide: Estate, Gift & GST Tax in Arizona: The Complete Guide.