Federal Annual Gift Tax Exclusion for 2024
Federal law imposes a tax on gifts made in excess of a specific amount in a calendar year to a specific recipient (known as a “donee”). That tax is usually paid by the donor (the giver) of the gift. The specific amount is known as the annual gift exclusion. The annual gift exclusion is $17,000 for 2023. For 2024, the annual gift exclusion increases to $18,000. The gift can be any type of property, including money.
The annual gift exclusion is applied to each donee. For example, assume that in 2023 you give gifts totaling $17,000 to each your three children, for a total of $51,000. (This might be done in a single gift to each child or a series of gifts so long as the annual total to each child is not greater than $17,000.) The annual gift exclusion would apply to each child. As a result, there would not be any federal gift tax payable. Now assume instead that in 2023 you give gifts totaling $17,000 to each of your three children and a gift of $25,000 to a good friend. The gifts to your children and the first $17,000 of the gift to your good friend would be subject to the annual gift exclusion. However, the additional $8,000 of the gift to your good friend would be a “taxable” gift because it was in excess of the annual gift exclusion to that donee. However, there may not be any gift tax payable because of application of the lifetime gift exclusion amount. If the taxable gift to your good friend did not result in using up your remaining lifetime gift exclusion amount, there would be no gift tax payable, but the amount of the taxable gift would reduce the remaining portion of your lifetime gift exclusion amount.
If you need assistance with your estate planning, contact Per Oscarsson or one of the other attorneys in Beresford Booth’s Estate Planning and Probate Group at email@example.com or by phone (425) 776-4100.