Updated: Nov 26, 2020
The Internal Revenue Service recently announced the official estate and gift tax limits for 2021 adjusted for inflation. With proper planning, married couples can give away up to $23.4 million to their family members and pay no federal estate tax or gift tax; both of which are currently at 40%. That's an individual estate and gift tax exemption limit of $11.7 million, which is a $120,000 increase from the 2020 exemption limit of $11.58 million). For married couples, that means being able to give away an additional $240,000, which is itself an increase from the combined exemption limit of $23.16 million last year.
The annual gift exclusion amount for 2021, however, remains the same at $15,000 per donor, per recipient. This means that you can still give away $15,000 to anyone with no federal gift tax consequences. But married couples can combine these amounts and make $30,000 gifts to the same individual; for instance, a grandchild, and thereby double the impact of planned gifting. In addition to the $15,000 amount, each individual can make unlimited payments for medical and tuition expenses as long as such payments are made directly to the doctor, hospital, or school. It should be noted that these gifts are not limited to children, grandchildren, etc. but can be made to anyone you choose.
Written by Jack Fan. If you have questions or remarks, please email me at email@example.com.