Each year statutory provisions require the IRS to adjust tax rates based on inflation. Although we’re a bit tardy posting the numbers, here are the ones that matter most for our purposes.
- Gift Tax Annual Exclusion: $18,000 per recipient or $36,000 per recipient for a married couple. This is not a limit on gifting, but a gift larger than the annual exclusion typically requires that you file a gift tax return to document partial use of your basic exclusion (lifetime) amount. You would not pay gift taxes until you give away more than the basic exclusion amount.
- Estates of decedents who die during 2024 have a basic exclusion amount of $13,610,000, increased from $12,920,000 for estates of decedents who died in 2023. The basic exclusion amount also applies to lifetime gifts, so you could use it for lifetime gifts or for estate tax purposes.
- Keep in mind that the basic exclusion amount is scheduled to drop back to pre-2018 levels at the end of 2025 unless Congress extends the current exclusion amount. On November 26, 2019, the IRS clarified that individuals taking advantage of the increased gift tax exclusion amount in effect from 2018 to 2025 will not be adversely impacted after 2025 when the exclusion amount is scheduled to drop to pre-2018 levels.
Taxes paid by estates and trusts are as follows:
| If Taxable Income Is: | The Tax Is: |
|---|---|
| Not over $3,100 | 10% of the taxable income |
| Over $3,100 but not over $11,150 | $310 plus 24% of the excess over $3,100 |
| Over $11,150 but not over $15,200 | $2,242 plus 35% of the excess over $11,150 |
| Over $15,200 | $3,659.50 plus 37% of the excess over $15,200 |
