Beginning in 2024 there are new estate tax numbers you should be aware of, particularly if you have a substantial estate that is taxable right now, or one that is likely to be taxable in the future.
The Federal Lifetime Unified Estate and Gift Tax Exemption
Effective January 1, 2024, the amount of money you can give away, estate tax-free, rises to $13.61 million. Married couples can double that amount.
Annual Gift Tax Exclusion
The amount you may give to any individual, to as many individuals as you wish, increases to $18,000 on January 1, up from $17,000. Married couples may double that amount. If you make a gift over $18,000 to any one individual, you must submit a gift tax return. The amount of the gift that is in excess of $18,000 will then be deducted from your lifetime exemption. However, no estate or gift tax is due until such time as you have used up your entire lifetime exemption.
Above Figures Will Change Again in 2026
The lifetime exemption increased dramatically with passage of the 2017 Tax Cut and Jobs Act. However, the law is scheduled to “sunset” effective January 1, 2026. The lifetime tax exemption will then be reduced by approximately half, and inflation-adjusted. The projected figure is around $7 million. Whether the law sunsets or is extended depends on whom controls Congress and the White House at that time.
No Clawback for Current Gifts
If you make tax-free gifts now in order to soften the blow of the lower lifetime exemption likely coming in 2026, the IRS has indicated that the gifts will not be subject to “clawback.” You won’t lose out by making gifts now. You can read our recommendations for making tax-free gifts in our previous blog post here.
Learn More From Attorney Karp On February 5
You can hear more about the upcoming estate tax changes and other timely issues when Attorney Joseph Karp speaks at the Robert Welstein Quest for Knowledge meeting on Monday, February 5 from 10:30 am to 12 noon at the South Palm Beach Town Hall, 3577 South Ocean Blvd., Palm Beach. Pre-registration is not required, but seating is limited.
