2024 Federal Estate & Gift Tax Amount & New York Basic Exclusion Amount

On November 9, 2023, the IRS issued Revenue Procedure 2023-34, providing the annual inflation adjustments for tax provisions to be used by individual taxpayers on their 2024 returns. The adjustments include the following:

• For 2024, the estate, gift, and generation-skipping transfer tax exemption amount is $13,610,000, an increase from $12,920,000 for transfers in 2023. It is important to note that if no new tax law is passed, the increased exemption amounts are scheduled to expire on December 31, 2025, which would mean a reduction in the exemption amounts to $5 million plus adjustments for inflation.
• The annual exclusion for gifts is $18,000 for calendar year 2024, an increase from $17,000 for 2023.
• For 2024, the first $185,000 of gifts to a spouse who is not a citizen of the United States (other than gifts of future interests in property) are not included in the total amount of taxable gifts made during that year, an increase from $175,000 for 2023.

In addition to the Federal estate tax, New York imposes its own estate tax. Effective January 1, 2024, the New York State estate tax exclusion increases to $6,940,000. It is important to note that, unlike the Federal exclusion amount, the New York basic exclusion amount is not portable, meaning if the first spouse to die fails to utilize his or her full exclusion amount, the surviving spouse will not be able to utilize the first spouse to die’s unused New York basic exclusion amount. 

Takeaways: These projections reflect the continued high rate of inflation. The increase in basic exclusion amount means that an individual will be able to transfer $690,000 ($1,380,000 for married couples) more, free of transfer tax liability in 2024 than they could in 2023. The $18,000 annual exclusion amount for gifts represents the third increase in three years: the exclusion amount for gifts was increased to $17,000 in 2023 from $16,000 in 2022 after remaining at $15,000 from 2018 through 2021.

Please click here to schedule a 30-minute call with me to discuss whether it makes sense to take advantage of the planning opportunities provided by these increases, especially in light of the sunset of the enlarged exemption amount at the end of 2025.

Michael Canarick