We wanted to provide you with an update on the 2024 Lifetime Gift and Estate Tax Exemptions. As of January 1. 2024. the federal lifetime gift and estate tax exemption amount increased to $13.61 million per person. This increased exemption amount means that individuals can transfer up to $13.61 million tax-free during their lives or at death. and married couples can transfer up to $27.22 million. It also means that. even if you have already gifted away your full exemption amount of $12.92 million in 2023, you have up an additional $690,000 to give away in 2024 (or an additional $1.38 million for married couples).
The annual gift tax exclusion amount also increased from $17,000 per person in 2023 to $18,000 per person in 2024 (or $36,000 for married couples choosing to split gifts).
The annual gift tax exclusion for gifts to non-citizen spouses for 2024 is $185,000. This is the maximum amount a person may transfer to a noncitizen spouse before the gift is subject to a gift tax. In order for US law to apply, generally this will be a gift that is being made to a permanent resident alien spouse. One place where this gets triggered unexpectedly by many is retitling of real estate. Give careful thought to adding a noncitizen spouse to a deed. This exemption is up from $175,000 in 2023.
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. starting January 1. 2026. Depending on the 2024 election outcomes. there could be additional changes to the federal lifetime gift and tax exemption amounts. In the meantime. it is wise to consider gifting now while the exemption amounts are higher. and gifting earlier in the year.
New York uses a different inflation calculation to determine its estate tax exemption. In 2024 the New York estate tax threshold is $6.94 million. That number will keep going up annually with inflation.
This means that if a person’s estate is worth less than $6.94 million and they die in 2024, the estate owes nothing to the state of New York. New York has a “cliff” that impacts very wealthy estates. If the estate exceeds the $6.94 million exemption by less than 5%, it only pays taxes on the amount that goes over the threshold. If the total value is more than 105% of exemptible amount, taxes are paid on the entire estate.
New York does not have any inheritance taxes or gift taxes. but it does have a three-year clawback period for gifts. meaning that any taxable gifts made within three years of a New York resident’s death will be retroactively included in the decedent’s estate for the calculation of estate taxes.
For more information on how you can take advantage of these increased gifting amounts, or address your New York taxable estate, contact our office at 866.230.2206.