How Can End-of-Year Gift and Tax Updates Affect Your Business in 2025?

As the new year approaches, it’s a good idea to start planning ahead, as significant tax changes could affect your business in 2025.

Standard Deduction

In addition to income tax bracket adjustments, the standard deduction will increase by $400 to $15,000 for single filers. For married couples, the standard deduction will increase by $800 to $30,000.¹

Roth IRAs and Roth Conversions

If you think income tax rates might go up, you could explore options like opening a Roth IRA or converting your current IRA to a Roth IRA. Roth IRA contributions will be with after-tax money. If you convert an IRA to a Roth, you will pay taxes on the converted amount. However, all future growth and distributions from the Roth IRA will be tax-free, assuming you meet the required Roth conditions.²

Estate Tax and Gift Exclusion

The annual federal gift tax exclusion will rise to $19,000 from $18,000 in 2025. Married couples can take advantage of a total gift tax rate of $38,000.3 

The lifetime federal estate tax exclusion establishes a threshold for the taxation an individual. In 2025, the federal exemption rises to $13.99 million, or $27.98 million for married couples. States may also have a separate, and often lower, death (estate or inheritance) tax threshold. ³ 

These upcoming tax changes may impact your estate plan. Plan ahead by contacting your local Federated^® marketing representative. They can help you get in touch with a list of network attorneys that specialize in estate planning and business succession.
 

1.  Bloomberg Tax. IRS Boosts Taxpayer Standard Deductions, Other Credits for 2025. Accessed 11/26/24.
2.  Investopedia. Roth IRA Conversion Rules. Accessed 12/11/24.
3.  The National Law Review. IRS Announced 2025 COL Adjustments for Estate, Gift Tax Exclusion Amounts. Accessed 11/26/24.

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