The Internal Revenue Service (IRS) has recently disclosed the annual inflation adjustments for the year 2024, affecting the lifetime estate and gift tax exclusion as well as the annual gift tax exclusion, among other parameters. In 2024, individual taxpayers facing mortality can now exclude up to $13,610,000 from their gross estate at the time of death, adjusted for lifetime taxable gifts, marking an increase from the $12,920,000 allowance in 2023. This adjustment implies that a married couple has the potential to safeguard assets totaling $27,220,000 without being subject to federal estate or gift taxes, up from $25,840,000 in the preceding year.
Additionally, individual taxpayers are permitted to make gifts amounting to $18,000 per recipient in 2024 (or up to $36,000 for married couples) without utilizing any portion of their lifetime estate and gift tax exclusion. Notably, gifts directly allocated to educational institutions and medical providers continue to be exempt from gift tax.
It is essential to recognize that the historically elevated basic exclusion amount, established by the Tax Cuts and Jobs Act in 2017, is scheduled to expire at the conclusion of 2025. In the absence of legislative intervention, the basic exclusion amount for 2026 is anticipated to decrease to around $7,000,000. To explore and implement strategies that leverage the current basic exclusion amount and optimize tax savings for beneficiaries, contact us today.
