Prior to 2024, the maximum amount that a person could gift without filing a gift tax return was $17,000 per person. If an individual transferred gifts worth more than $17,000 to one person in a year, then the person who provided the gift would have to file a gift tax return with the IRS. The maximum amount that can be gifted in a year without filing a gift tax return is known as the annual exclusion.
Effective January 1, 2024, the annual exclusion has increased to $18,000. If a person transfers $18,000 or less as gifts to one person in a year then a gift tax return will not have to be filed with the IRS. On the other hand, if more than $18,000 is transferred in one year to a person as a gift, then a gift tax return will have to be filed with the IRS.
The exemption from the federal estate tax has also increased this year. Last year the exemption from the federal estate tax was $12,920,000. A decedent’s estate would have to be worth more than $12,920,000 to be subject to the federal estate tax. This exemption has increased significantly in 2024. The exemption from the federal estate is $13,610,000 in 2024. The exemption from the federal estate tax this year is $27,220,000 for a married couple.
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