what is the unified tax credit 
the unified tax credit or unified transfer tax is available to all u s taxpayers by the internal revenue service irs and combines two separate lifetime tax exemptions for gift and estate taxes the combined exemption limit applies to taxable gifts you make to others during your lifetime inter vivos gifts and assets you leave to beneficiaries as testamentary transfers understanding the unified tax creditindividuals who give substantial assets to another while living may face gift taxes assets left for beneficiaries after death may be subject to estate taxes the unified tax credit sets an amount that individuals can gift during their lifetime and bequeath to heirs before any gift and estate taxes apply 23the donor is responsible for paying the gift tax however the recipient may agree to pay the tax instead if you are considering this type of arrangement contact a tax professional for guidance 2the unified tax credit rolls the gift and estate tax exclusions into one tax system and decreases the individual s or estate s tax bill dollar for dollar an individual or couple who gifts some of their assets may need to file a gift tax return if the value of the assets is higher than the annual exclusion amount gifts made to charities or to pay another person s medical or tuition expenses are exempt from gift tax return requirements 4annual gift tax exclusionmost taxpayers can gift up to 17 000 in 2023 and 18 000 in 2024 without notifying the irs the annual exclusion is per person so married couples filing jointly can gift up to 34 000 in 2023 or 36 000 in 2024 without filing a gift tax return if you give more than 17 000 in 2023 you must disclose the gift on form 709 doing so doesn t necessarily mean you will owe taxes on the amount but the value over 17 000 may count against your lifetime exemption 516several types of transfers aren t subject to gift tax requirements according to the irs a gift is any transfer to an individual either directly or indirectly where full consideration measured in money or money s worth is not received in return 7federal estate tax ratesthe 2023 federal tax law applies the estate tax above 12 92 million individuals can pass 12 92 million to their heirs and couples can transfer twice that without paying tax for 2024 the exemption is 13 61 million for individuals and 27 22 million for married couples filing jointly 13only a percentage of estates in the u s are worth more than these exemption thresholds for those that are federal estate tax rates apply to any amount above the exemption thresholds the federal estate tax maxes out at 40 for taxable amounts above 1 million 8 here s a look at how the tax accumulates as the taxable amount increases source internal revenue service9unified credits and probatethe probate process can be expensive so some people use the unified tax credit to save on estate taxes after their deaths the credit is not used for reducing gift taxes during the individual s lifetime but instead used on the inheritance amount bequeathed to beneficiaries after death to take advantage of this lifetime credit beneficiaries or the decedent s estate executor must complete irs form 706 which is used to determine the estate tax imposed by chapter 11 of the internal revenue code irc 10taxpayers can use the unified tax credit before or after death or both keep up on the annual gift exclusion and gift and estate tax exemption since tax laws change periodically 