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It is advisable for taxpayers to review their estate plans and their annual gifting in order to ensure that they are taking advantage of the increased estate and gift tax exemptions in 2024.
The federal estate tax exemption increases to $13.61 Million per person in 2024, up from $12.92 Million per person in 2023. For married couples the amount is $27.22 Million in 2024, up from $25.84 Million in 2023. This means that only estates valued at more than $13.61 Million will be subject to federal estate tax, and such tax will be only on the amount over the 13.61 Million threshold on a graduated scale that maxes out at 40%.
The annual gift tax exclusion amount for an individual increases to $18,000 to each donee, up from $17,000 in 2023. For married couples the amount is $36,000 to each donee, up from $34,000 in 2023. This means that an individual can give up to $18,000 to as many donees as he or she wants without incurring taxes on the gifts. If an individual gives more than $18,000 to a donee in 2024, the overage can be deducted from the donor’s $13.61 Million lifetime exemption.
Talk to your estate planning attorney about how to maximize the federal estate and gift tax exemption increases while they are available, as these increased exemption amounts are set to expire at the end of 2025 per the Tax Cuts and Jobs Act of 2017.