Under current law the federal estate, gift, and generation-skipping transfer tax exemptions have become unified and are indexed for inflation on an annual basis.  Since 2011, the exemption and tax rate have changed as follows:

Year    Exemption       Tax Rate

2011    $5,000,000      35%

2012    $5,120,000      35%

2013    $5,250,000      40%

2014    $5,340,000      40%

2015    $5,430,000      40%

The annual exclusion from gift taxes is also indexed for inflation on an annual basis but only in $1,000 increments.  Since 2011, the annual gift tax exclusion has changed as follows:

Year    Exclusion

2011    $13,000

2012    $13,000

2013    $14,000

2014    $14,000

2015    $14,000

[ac_popup imagesrc=”https://www.themckenziefirm.com/wp-content/uploads/2014/04/Denver-Estate-Planning-Attorney.jpg” linkid=”myModal3″]


Likely 2016 Estate, Gift, GST and Annual Gift Tax Limits

While the IRS will not officially release the 2016 inflation-indexed exemption and exclusion until later in October, Wolters Kluwer Tax & Accounting has released its 2016 predictions based on historical inflationary trends.  According to Wolters, the exemption should end up at $5,450,000 in 2016, or $10,900,000 for married couples.  While this is a mere $20,000 per individual / $40,000 per married couple increase over the 2015 exemption, it is a whopping $450,000 per individual / $900,000 per married couple increase since 2011. Unfortunately, Wolters anticipates that the annual gift exclusion will remain at $14,000 for 2016.

Wealthy individuals and couples should continue to monitor these inflation-indexed numbers and plan accordingly. We will update you on the official 2016 numbers once they are released by the IRS.

Update: The IRS has released the 2016 numbers and the estate tax exemption was raised from $5.43 million to $5.45 million for individuals, and the gift exemption did remain at $14,000.