One of the most effective estate-tax-saving techniques is also one of the simplest: making use of the gift tax annual exclusion. It allows you to give to an unlimited number of family or friends cash or property valued up to a “specified” amount each year without owing gift tax or using up any of your lifetime gift and estate tax exemption. For 2023, the annual exclusion amount is $17,000.
The annual exclusion amount is subject to inflation adjustments. For 2024, the amount will increase to $18,000 per recipient. It’s notable because the amount had been stagnant at $15,000 for several years (2018-2021) but, beginning in 2022, it has increased $1,000 each year due to higher inflation.
Each year you need to use your annual exclusion by Dec. 31. The exclusion doesn’t carry over from year to year. For example, if you don’t make an annual exclusion gift to your granddaughter this year, you can’t add your $17,000 unused 2023 exclusion to your $18,000 2024 exclusion to make a $35,000 tax-free gift to her next year. Contact the office with questions.
Email Updates