Statewide, the majority of people don’t have to worry about the New York estate tax or the federal estate tax. This is due to the fact that these taxes target high-net-worth individuals. However, there are plenty of multimillionaires in Manhattan where we practice.
Clearly, the logical reaction to an estate tax would be lifetime gift giving. We are going to share details about this course of action in this post. Before we drill down to them, we will provide an overview of the federal estate and gift tax.
Record High Exclusion
At the present time, the federal estate tax exclusion is at a record high as a result of a provision contained within the Tax Cuts and Jobs Act that was enacted in December of 2017. During that calendar year, the exclusion was $5.49 million, and it was increased to $11.18 million for 2018.
There have been adjustments to account for inflation since then. This year, the federal estate tax exclusion is $13.61 million. The maximum rate of the tax is 40 percent.
Federal Gift Tax
In addition to the federal estate tax, there is a gift tax, and the two taxes are unified. The exclusion applies to large lifetime gifts and the estate that will be transferred after you pass away.
That’s the bad news, but the good news is that there is an additional annual gift tax exclusion. You can give as much is $18,000 to an unlimited number of people during a calendar year free of federal transfer taxes.
To be clear, there is no limit to the total amount of money you can give every year as long as you do not give more than $18,000 to any one person. If you give a larger gift, you will use a portion of your large exclusion to give it tax-free.
New York Estate Tax
Now that we have provided the necessary background information, we can look at the New York estate tax and the matter of gift giving. Our tax on the state level has a $6.94 million in 2024, and there is a graduated rate that starts at 3.06 percent and maxes out at 16 percent.
Gift Giving
There is no state-level gift tax, and in fact, Connecticut is the only state in the union that has a state-level gift tax. However, this does not mean that you can freely give gifts at any time before your death in a tax-free manner.
We have a three-year “clawback” provision in New York. Any lifetime gifts that you give within three years of your passing are considered to be part of your estate for tax purposes.
New York Estate Tax “Cliff”
Our state has another unusual provision that is not a good thing for people who have accumulated significant wealth. If the value of your estate exceeds the exclusion by more than 105 percent, the entirety of your estate will be subject to the estate tax.
Attend a Free Webinar or View Our On-Demand Webinar!
We go the extra mile to provide educational opportunities in a number of different ways. You can always access new information on this blog, and there are other written materials that you can tap into free of charge.
Plus, we offer opportunities to interact with us in real time through our webinars. They cover the most important estate planning and elder care topics, and there is no admission fee, so you should definitely take advantage of one of these opportunities.
You can see the schedule if you visit our Manhattan, NY estate planning webinar page.
If you don’t see anything that fits into your schedule, there are no worries. We have also recorded an on-demand webinar that you can access at your convenience from the same page.
- Are You Prepared for Long-Term Care Costs? - August 15, 2026
- How Often Should I Review My Estate Plan? - August 1, 2026
- What Happens When an Executor and a Beneficiary Disagree? - July 15, 2026
See Larger Map Get Directions