The Internal Revenue Service (IRS) has announced that the individual estate and gift tax exemption will be $5.45 MM per individual for 2016, which translates into a $10.9 MM exemption for Married Couples. This is an increase from the $5.43 MM exemption in 2015. The annual gift tax exclusion remains the same at $14,000 per individual recipient.
The inflation adjustment is important to wealthy taxpayer's who try to reduce their estates below the exempt amount. The exemption amount was $2 million in 2008, $1 million in 2003 and $675,000 in 2001and prior years. The top federal estate tax rate remains at 40%.
The federal gift tax is tied to the estate tax, so the inflation indexing helps wealthy taxpayers by allowing them to make tax-free lifetime gifts as well up, to the exemption amount.
Mr. Blumenfeld concentrates his practice in the areas of International Tax and Estate Planning, Probate Law, and Representation of Resident and Non-Resident Aliens before the IRS.
Prior to joining Marini & Associates, P.A., he spent 32 years as the Senior Attorney with the Internal Revenue Service (IRS), Office of Deputy Commissioner, International.
Read more at: Tax Times blog