Effective January 1st , 2024, the IRS made updates to both federal gift and estate tax exemptions which provides a unique opportunity to improve your estate plan.
When a person gives money or property to someone other than a spouse or dependent, that person may be required to pay gift tax. The IRS allows individuals to give away specific amounts or money or property each year tax-free. This annual gift tax exclusion was increased from $17,000 per person to $18,000 per person. Married couples can double a gift to a single recipient by each utilizing their $18,000 annual gift tax exclusion for a total gift of $36,000.
If your gift exceeds the $18,000 annual limit for 2024, that does not automatically trigger gift tax. Every individual has a lifetime gift exemption which allows a person to give assets away over the course of a lifetime. Any amount over the annual gift exclusion amount needs to be reported on a gift tax return. That amount simply reduces your lifetime gift exemption and taxes are not imposed until you have used your entire lifetime gift exemption. The individual lifetime exemption for federal gift and estate tax rose from $12.92 million per person in 2023 to $13.61 million per person. For married couples, those amounts are combined for a total exemption of $27.22 million.
Maryland Estate Tax
The Maryland estate tax exemption remains at $5 million per person or $10 million per married couple.
Florida Estate Tax
Florida does not have estate tax at the state level so federal estate tax would be due if the estate exceeds $13.61 million per person or $27.22 per married couple.
Pennsylvania Estate Tax
Pennsylvania does not have estate tax at the state level so federal estate tax would be due if the estate exceeds $13.61 million per person or $27.22 per married couple.
