2024 Federal Estate And Gift Tax Update

While married U.S. citizens can gift unlimited amounts of money to each other during life and after death, gifts outside of the marriage, such as those to children or other family members, may result in tax consequences if they exceed specific amounts. Though subject to change if new legislation is enacted, the below items highlight the landscape of federal gift and estate tax law as of January 1, 2024:

• The lifetime exclusion amount for federal gift and estate taxes for the year 2024 increases to $13,610,000 per person, or $27,220,000 for a U.S. married couple. Unless new legislation is enacted before January 1, 2026, these amounts are expected to decrease to around $7,000,000 per person, or around $14,000,000 for a U.S. married couple, on that date when the sunset provision of the 2017 Tax Cuts and Jobs Act takes effect.

• The federal lifetime exclusion amount remains “portable,” meaning an individual’s unused exclusion amount transfers to his or her surviving spouse if the proper election is made on the decedent’s estate tax return. This election must be made within five years of the deceased spouse’s death.

• The annual federal gift exclusion amount increases by $1,000 per person for the year 2024 up to $18,000 per person, or $36,000 for a married couple.

• The highest federal estate tax, gift tax, and GST tax rate remains stable at 40%.

See this piece from JD Supra for more extensive discussion of current federal gift and estate tax law. Happy New Year!