We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is the Unified Tax Credit?

Malcolm Tatum
Updated: Feb 02, 2024

A unified tax credit lets someone offset estate or gift taxes incurred within a given period, reducing the amount of tax that needs to be paid. This helps to lessen the financial liability that normally comes along with transfers of property. A single credit is available for both types of taxes, so numerous gifts and a large inheritance can use it up. The exact amount can change from one year to another, so a professional accountant should be consulted by anyone who needs assistance with filing.

How It Works

While tax laws generally seem fairly complex, a unified tax credit is rather simple. Large gifts or estates are usually taxed by the government. That tax may be imposed on the gift giver or recipient. By using a unified tax credit, the taxpayer can significantly reduce the amount that needs to be paid, sometimes eliminating it completely. This is usually a lifetime value, however, so a decrease in one year reduces the total amount a person qualifies for each year afterward.


Currently, the unified tax credit allows payers to add up any estate or gift taxes that are owed during the year and offset at least a portion of the total due. As with similar types of credits, it is necessary to document the value of the assets, properly assess the amount due, and then determine what reductions are allowed. Different forms are used for these filings, but as long as a person has remaining credit for gift taxes, he or she must apply it toward that amount.

Gift Taxes

Only certain types of gifts can be taxed. Donations to political campaigns or non-profit charities, for example, do not usually qualify. Gifts must also be of a certain value before any fees are placed upon them. The cutoff was $13,000 US Dollars (USD) in 2012 for example, though this is likely to change in the future.

Anyone giving a gift less than that amount does not have to worry about paying taxes on it. Someone giving a gift of $20,000 USD would ignore the first $13,000 USD and have to pay on the remaining $7,000 USD. Once he or she determined the total owed, the gift-giver would deduct it from the unified tax credit and then pay any remaining amount.

Estate Taxes

The unified tax credit works in much the same way for a person's estate after dying. The amount owed depends on the total worth of the estate: if it is below a certain value, then nothing is due. Any amount beyond that cutoff can warrant taxes, which are then deducted from the credit to determine what needs to be paid.

Specific Information

Taxpayers should seek the counsel of an accountant who is well-versed in current codes. A professional of this type is usually aware of any and all changes to existing laws that can impact the eligibility of a given asset. Tax laws change and are revised on a fairly regular basis, so an exemption from two years ago may no longer be valid. Professional advice about the unified tax credit can ensure someone pays what is necessary and does not have to deal with future issues regarding unpaid amounts.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Link to Sources
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.