An Estate tax is charged to a decedent’s estate when their assets pass to their beneficiaries. The Federal government allows for a Federal Estate Tax Exemption. This allows a decedent to pass a certain amount estate tax free. The estate tax exemption amount for 2024 is 13.61 million. The exemption amount changes each year. The current exemption schedule is designed to sunset at the end of 2025 and will revert back to around 6 million unless Congress takes action before then.
Many states now have death taxes that are in addition to the federal estate tax. The State of Hawaii currently has an estate tax exemption of $5.49 million which causes a significant difference in federal and state estate taxes.
The federal Gift Tax Exemption is unified with the federal Estate Tax Exemption, whereby a taxpayer has up to $13.61 million (adjusted for inflation annually) for lifetime gifts and value of assets at death. The annual Gift Tax exclusion is currently $18,000 but subject to change.