The unified credit, also known as the federal estate tax exemption or the basic exclusion amount, is a tax provision in the United States that allows individuals to transfer a certain amount of assets to non-spousal heirs without being subject to federal estate tax. The unified credit effectively exempts a certain amount of an individual’s estate from federal estate taxes upon their death.
The amount of the unified credit is subject to change and is set by the Internal Revenue Service (IRS) each year. It’s designed to adjust for inflation over time. For example, in 2024, the federal estate tax exemption is $13,610,000 per individual or $27,220,000 for a married couple filing jointly. Amounts above this exemption threshold are subject to estate tax, which is a tax on the transfer of the estate of a deceased person.
It’s important to note that state estate tax laws may differ, and some states have their own estate tax exemptions and rates. Therefore, individuals should consult with a tax professional or attorney to understand how the unified credit applies to their specific situation and any relevant state laws.
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