The IRS recently announced the 2024 inflation adjusted amounts related to gift and estate taxes.
For individuals who die in 2024, up to $13,610,000 of the decedent’s assets, reduced by the value of taxable gifts made during life, will be excluded from federal estate taxation. This reflects a significant increase from the 2023 exclusion amount of $12,920,000. This larger exclusion amount also applies to gifts made during life meaning a married couple can give up to $27,220,000 during life without incurring gift tax.
The annual exclusion amount – the amount an individual can give without using any of her lifetime exclusion – increases to $18,000 per gift recipient or $36,000 for married couples in 2024.
We note that the 2017 tax act increased the lifetime exclusion amount to its current level, but that provision is temporary. If Congress does not act, beginning in 2026 the exemption will effectively be reduced in half. That means, assuming modest inflation adjustments, the exemption amount will be reduced to approximately $7M ($14M for married couples). While it’s possible Congress will step in to prevent this tax “cliff,” families should review their estate plans now to consider how the possible rollback of the lifetime exemption amount will affect them.