IRS Announces Increase In Gift And Estate Tax Exemptions, Tax Brackets, Etc. For 2024

IRS Announces Increase In Gift And Estate Tax Exemptions, Tax Brackets, Etc. For 2024

As of January 1, 2024, you can give up to $18,000 per year, per person (other than gifts of future interests) without reporting to the IRS and without gift taxation. So, for example, if a married couple with three children wanted to give the maximum to each child, then they could give up to $108,000 ($18,000 x 3 by the husband and $18,000 x 3 by the wife) in year 2024 without reporting to the IRS.

If one gives more than $18,000 in a year, the donor (not the one receiving the gift) has a duty to report to the IRS about the amount which is given in excess of the annual exclusion limit. However, that doesn’t mean the donor has to pay a gift tax. As of January 1, 2024, a person (the “donor”) can give, without gift taxation, up to the whole amount the donor is allowed to give at death without estate taxation. If one dies in year 2024, the amount that can be passed without federal estate taxation is increasing from $12,920,000 million (in year 2023) to $13,610,000 as of January 1, 2024. So, if a married couple wanted to use both of their full exemptions in year 2024, they could give $27,220,000 in year 2024 (assuming they haven’t given more than the annual gift tax exclusion in prior years). The number is the same for the generation-skipping transfer tax exemption.  The estate tax exclusion is scheduled to be reduced to one-half of the 2025 estate tax exclusion amount as of January 1, 2026.

Although there is no limit to gifts between spouses if they are U.S. citizens, if one spouse who is not a U.S. citizen receives a gift from a U.S. citizen spouse, the gift without taxation is limited to $185,000 in year 2024. This is not included in the total amount of taxable gifts.  The annual gift tax exclusion is not applicable to transfers in connection with means-tested public benefits such as Medicaid which has rules to prevent fraud.

Also, income tax brackets have changed.  The highest income tax bracket of 37% is (1) $731,200 in adjusted gross income for those who are married and filing jointly (2) $609,350 for either those who are unmarried or heads of households, (3) $365,600 for married filing separately and (4) $15,200 for estates and most irrevocable trusts.

The standard deduction for year 2024 will be (1) $29,200 for married individuals filing jointly, (2) $21,900 for heads of households and (3) $14,600 for unmarried individuals or for married individuals filing singly.  

If interested in learning more about this article or other estate planning, Medicaid and public benefits planning, probate, etc., attend one of our free upcoming Estate Planning Essentials workshops by clicking here or calling 214-720-0102. We make it simple to attend and it is without obligation.

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