What is the federal estate tax exemption for 2024?
The federal estate tax exemption for 2024 is $15 million per individual ($27.22 million for married couples with portelection). Estates below this threshold owe no federal estate tax. The tax rate on amounts above the exemption is a flat 40%. Note: the exemption is scheduled to be cut roughly in half in 2026 when the Tax Cuts and Jobs Act provisions expire, dropping to approximately $7 million (inflation-adjusted) unless Congress acts.
Which states have their own estate tax?
Twelve states (and DC) impose their own estate tax with exemptions below the federal threshold: Oregon ($1M), Massachusetts ($2M), Washington ($2.19M), Illinois ($4M), Minnesota ($3M), Rhode Island ($1.73M), Vermont ($5M), Maine ($6.8M), New York ($6.94M), Hawaii ($5.49M), Connecticut ($13.61M), and Maryland ($5M). Maryland is unique in having both an estate tax and an inheritance tax.
How can I reduce federal estate taxes?
Key strategies: (1) Annual gift exclusion — give up to $18,000 per recipient per year tax-free (2024); (2) Spousal transfers — unlimited marital deduction for US citizen spouses; (3) Charitable donations — reduce the taxable estate; (4) Irrevocable life insurance trusts (ILITs) — keep life insurance out of the estate; (5) Grantor retained annuity trusts (GRATs); (6) 529 education plans and medical/tuition exclusions. Work with an estate planning attorney for large estates.