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A person interacts with a holographic “TAX” interface displaying financial iconsIn this article, you will discover:

  • How to strategically capitalize on the lifetime federal gift exclusion in Texas.
  • The unlimited marital deduction that enables spouses to more efficiently navigate gift tax considerations.

What Is The Gift Tax In Texas In 2023?

Texas does not assess gift taxes or inheritance taxes. However, the Federal Government does assess both gift taxes and estate taxes. The annual gift tax exclusion for 2024 is $18,000, and the lifetime estate tax exclusion is $13, 610,000 for 2024. Unless the US Congress takes action to extend the estate tax exclusion at the current level, the estate tax exclusion will drop back to $5,000,000 at the end of 2025 but will be indexed for inflation. Clearly, we can’t predict the makeup of Congress or who will the President at that time, so we can’t predict if the higher exclusion will be maintained.

The possible changes may also offer an opportunity to take advantage of the current estate tax exclusion by gifting assets up to the estate tax exclusion amount prior to the end of 2025. This may help reduce the effect of estate taxes, but gifting is irrevocable and should only be considered with the help of legal, financial and/or tax professionals. Every client will have different needs and concerns.

What Is The Unlimited Marital Deduction In Estate Taxes In Texas?

Neither gifts during life or at death between spouses are subject to gift taxes or the Federal Estate Tax. During the lifetimes of both spouses, each spouse has his or her separate Federal Estate Tax exclusion, or two exclusions between them. However, without further planning, the marital estate is unified at the death of the first spouse to die, and the surviving spouse will then have one exclusion.

Several techniques may be used to maintain the two credits by using properly drafted trusts or wills. A surviving spouse might also consider filing an Estate Tax Return for a deceased spouse in order to retain “portability” which is the transfer of the unused exclusion of the deceased spouse to the surviving spouse. The surviving spouse will not owe Federal Estate Tax when filing the Estate Tax return. Just as with gifting, clients who wish to maximize Federal Estate Tax savings by using estate planning techniques and filing Estate Tax returns for portability purposes should be done with the advice of legal, financial and/or tax professionals.

For more information on Taxes & Deductions In Texas Estate Planning, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (972) 366-7201 today.

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