The IRS issued a special rule that would apply the higher Gift Tax exemption currently availabe even after the Gift Tax exemption has been cut in half. The Estate and Gift Tax Exemptions are currently set for $11.7 Million for an individual ($23.4 for a couple) and are set to expire in 2025. These exemptions are the highest that have ever been set and the current administration is planning on lowering those amounts to $5 Million for an individual ($10 Million for a couple) effective 2026.
If you are planning on making any gifts that would be exempt by the current exclusion it will not harm your Estate once the rate drops. The IRS in 2019 clarified its position and provided a special rule that effectively allows the estate to compute its estate tax credit using the greater of the Gift Tax exclusion made during life or the Gift Tax exclusion that is effective on the date of death. Therefore, making large gifts now within the current levels of the Gift Tax exemption will not adversely impact Estate Gift Tax on death even if the Gift Tax exemption is lower than the Gift made. For example, an individual making a $11 Million gift today that dies in 2026 when the Gift Tax exemption is set to be $5 Million his Estate Tax are calculated by applying the higher exemption that was used in 2021.