For 2024, the federal estate tax exemption amount will increase to $13.61 million, up from $12.92 million in 2023. This means that estates valued below this threshold won’t owe federal estate taxes, potentially saving heirs from a substantial tax bill. For married couples, the exemption doubles to $27.22 million.
Estates exceeding the exemption amount are taxed at a 40% rate on the amount above the threshold. The exemption amount will drop back to approximately $5 million (adjusted for inflation) starting in 2026, following a significant increase in 2018.
Additionally, state estate taxes may apply, with some states like Massachusetts having much lower exemptions ($1 million), and states like Nebraska and Kentucky imposing inheritance taxes on smaller amounts.
If you have questions about 2024 tax rates or inheritance tax law in general, please contact your ShindelRock tax professional. [1]