The IRS Announces 2017 Estate and Gift Tax Limits
Earlier this week, the IRS announced the 2017 Estate and Gift Tax Limits. An article summarizing the changes was published in Forbes - Click Here to Read the Full Article.
The limit on annual exclusion gifts (the amount a person can gift to someone each year without any gift tax consequences) will remain unchanged at $14,000.
The estate and gift tax exemption will increase from $5.45 million to $5.49 million per person. This means that a married couple will now be able to shield up to $10.98 million from federal estate and gift taxes. The federal tax rate on assets in excess of the exemption will remain unchanged at 40%.
Under current law, the estate and gift tax exemption continues to be rise with inflation, so we see these relatively small increases each year. However, historically, the exemption has been much lower - as low as $675,000 just 15 years ago. The following chart shows the exemptions and estate tax rates going back to 1997.
Like everything, laws change. We may see a decrease to the exemption or increase to the tax rate in the future. It has been reported that Hillary Clinton favors a decrease of the exemption to $3.5 million and an increase the top estate tax rate to 65%. On the other hand, it has been reported that Donald Trump favors a repeal of the federal estate tax.