Woman analyzes data on tablet

Inflation increases present more opportunities for smart gift giving

On Jan. 1 of each year, there is an inflation increase to the gift and estate tax basic exclusion amounts and to the gift tax annual exclusion. Although the IRS does not issue the actual figures until the fall, it is possible to project the inflation adjustments. Currently, the lifetime basic exclusion amount — the amount that any individual can shelter from gift and estate tax during their lifetime — is $12,920,000. In 2024, that is projected to increase by $740,000, and it is reasonable to assume that the 2025 increase will be another $500,000. For planning purposes, this means that individuals will be able to give away almost $1.3 million over the next two years before the sunset of the exemption after 2025 to an amount projected to be about $6-7 million (refer to our previous article, Plan your estate before it’s too late, for more information).

Additionally, the annual gift exclusion — currently $17,000 is projected to increase to $18,000 in 2024 and probably to $19,000 in 2025. The gift tax annual exclusion is the amount an individual can give to as many people as he or she wants without using any of the lifetime basic exclusion amount.

These inflation increases present more opportunities to plan for smart gift giving and should not be wasted.

For more information about this topic or to discuss your specific situation, connect with our team.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

Randi Schuster
Next up

Double whammy! Be careful to properly time pre-sale gifts of appreciated stock to charity