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IRS Gift Tax Annual Exclusion Rate for 2024

Posted on Wed Jan 10, 2024, on Estate Planning

From Our “Ask a Question” Mailbag: “Last year, I gave each grandchild the 2023 Annual Gift Tax exclusion of $17,000.00. What is the IRS Gift Tax Annual Exclusion for 2024?”

IRS Gift Tax Annual Exclusion Rate for 2024

Estate Planning Team

IRS Gift Tax Annual Exclusion Rate for 2024.

Now that 2023 is in the rearview mirror, it is time to start planning tax-wise gifting for 2024.  

Remember, each year, you can make certain gifts that are not subject to the Federal Gift Tax. These include paying for tuition, medical care, charitable gifts, and the Annual Exclusion.

What is the Annual Exclusion?

The Annual Gift Tax Exclusion is an amount you may give to a person without reporting the gift to the IRS or using up any of your Gift Tax Exemption.  

Congress decided that there was a certain amount you could give away each year for any reason that was too small to oversee. This amount refreshes each year, so it is “annual.”  You can’t save up gifts; it is use-or-lose. This annual gift is per recipient, so you can give away gifts to any number of people as long as you don’t go over the maximum amount per person.

For example, if you have six grandchildren and the annual exclusion is $18,000.00, you can give each grandchild $18,000.0 without filing any paperwork with the IRS. By doing so, you remove. $108,000.00 from your federal taxable estate. This is a tax savings of $43,200.00 should your estate be subject to the Federal Estate Tax. If you are married, you can double your gift by using your spouse’s ability to gift.

Furthermore, you can also accelerate gifting by using a 529 plan. Reach out to your. Financial Planner about details.

The 2024 Annual Exclusion?

The Federal Gift Tax Exemption rate for 2024 is $18,000.00 per recipient. This makes the third year in a row the rate went up. 

My Grandchildren are Minors; How Do I Give Them a Gift?

The gift doesn’t have to go directly to the recipient to qualify for the exemption. As mentioned above, 529 plans are a convenient alternative if you want the assets earmarked for education. Contact me to discuss establishing an Irrevocable Trust if you want more flexibility. Using an irrevocable trust allows you to remove the assets from your estate, keep them out of your grandchildren’s control until they are more mature, and give the trustee great flexibility in investing the funds. If you like, the trust can limit a grandchild from receiving distributions until after your death. This way, you can take advantage of the Annual Gift Tax Exclusion but not live to see your grandchild wasting the gift. Having a descendant wait until age 25 or 30 for the chance to use funds is a fine idea. Most of us are not financially savvy when we are 18.

To read more, follow this link to my website’s pages entitled Irrevocable Trusts: Everything You Need To Know.

In Conclusion, What is the IRS Gift Tax Annual Exclusion Rate for 2024?

I hope you found this short article about the 2024 Gift Tax Exclusion. I have also included some links for more detailed information.

Contact us if you want to know more about estate planning or have questions about trusts. Let our Pennsylvania Estate Planning Lawyers help walk you through what can be a confusing process. Feel free to contact our office for a free consultation. 

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Gift Tax

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