Big Increase in 2024 Estate Exemption – IRS Issues 2024 Inflation Adjustments
The IRS recently issued the 2024 annual adjustments for numerous tax provisions, including changes to tax brackets and standard deductions. Popular adjustments include:
- Estates of decedents who die during 2024 will have a basic exclusion amount of $13,610,000, which is an increase of $690,000 from the current exclusion amount of $12,920,000. Taxpayers who are using lifetime gifts as a way to decrease their taxable estates can use this increase to exempt additional lifetime gifts.
- The annual exclusion for gifts will increase to $18,000 for calendar year 2024, which is an increase of $1,000 from the current amount. For couples who elect to gift split, this means they can gift a total of $36,000 per year per donee in 2024.
- The standard deduction for married couples filing jointly for tax year 2024 will rise to $29,200, up $1,500 from 2023. For single taxpayers and married individuals filing separately, the standard deduction will rise to $14,600 for 2024, up $750 from the current amount, and for heads of households, the standard deduction will be $21,900 for tax year 2024, which is an increase of $1,100.
- Marginal Rates: For tax year 2024, the top tax rate remains 37% for individual single taxpayers with incomes greater than $609,350 ($731,200 for married couples filing jointly). The other rates are:
- 35% for incomes over $243,725 ($487,450 for married couples filing jointly)
- 32% for incomes over $191,950 ($383,900 for married couples filing jointly)
- 24% for incomes over $100,525 ($201,050 for married couples filing jointly)
- 22% for incomes over $47,150 ($94,300 for married couples filing jointly)
- 12% for incomes over $11,600 ($23,200 for married couples filing jointly)
- The lowest rate is 10% for incomes of single individuals with incomes of $11,600 or less ($23,200 for married couples filing jointly)
- For the taxable years beginning in 2024, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements (FSA) will increase to $3,200. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount will be $640, which is an increase of $30 from the current amount.
This information and additional details can be found on the IRS website.
Tagged In: cafeteria plans, estate taxes, flexible spending account, lifetime gifts, standard tax deductions, tax brackets
