2024:

The MLO Minute: “Federal Exemption and Exclusion Amounts Increase For 2024” 

By Dennis McAndrews, Esq. and Jennifer Simons, Esq. — 

The IRS has announced that for 2024, the federal lifetime gift and estate tax exemption amount will increase to $13.61 million per person. This increased exemption amount means that individuals can transfer up to $13.61 million federal estate tax-free during their lives or at death, and married couples can transfer up to $27.22 million. It also means that, even for anyone fortunate to have sufficient excess funds to have gifted away the 2023 full exemption amount of $12.92 million in 2023, such fortunate individuals will have up an additional $690,000 to gift in 2024 (or an additional $1.38 million for married couples).

The annual gift tax exclusion amount has increased from $17,000 per person in 2023 to $18,000 per person in 2024 (or $36,000 for married couples choosing to individually make gifts). Gifts within these exemption amounts need not be reported on a federal gift tax return and are excluded when, at death, a federal estate tax calculation is made.

It is important to note that the increased federal gift and estate tax exemption amounts are set to expire on December 31, 2025, under the 2017 Tax Cuts and Jobs Act. Unless there are legislative changes, the exemptions will revert to $5 million per person, adjusted for inflation, as of January 1, 2026. Depending on Congressional action, there could be additional changes to the federal lifetime gift and tax exemption amounts. In the meantime, for those individuals with substantial assets, it is wise to consider gifting now while the exemption amounts are at these higher levels.