Author – Peggy Lennon
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Each year, the IRS sets the amounts that one can give free of federal gift and generation-skipping transfer (GST) tax, to account for inflation. These adjustments impact the lifetime exclusion, which is the amount that one can give free of federal gift and generation-skipping transfer (GST) tax, either at lifetime or at death, as well as the annual gift tax exclusion.
The lifetime exclusion for 2023 was $12,920,000 for individuals and $25,840,000 for married couples. In 2024, the lifetime exclusion has been adjusted to $13,610,000 for individuals and $27,220,000 for a couple. This increase means that a married couple who has not previously made gifts utilizing any lifetime exemption can shield a total of $27.22 million from federal estate or gift tax. For a couple who has already maxed out lifetime gifts, this means that they may now give away another $1.38 million starting in 2024.
The annual gift tax exclusion allows a taxpayer to give a certain amount per recipient tax-free without using up any of the taxpayer’s lifetime exemption. For 2023, the amount was $17,000 per recipient, and the amount has increased to $18,000 for 2024. For married couples, this means that they can give $36,000/year per recipient. A special annual exclusion amount for a non-citizen spouse also received an inflation bump – for 2024. It has increased to $185,000.
If you have any questions about these tax rules, we are here to help.
By Peggy Lennon
