Estate Tax

Estate Tax Exemption Limit Changes for 2018

Estate Tax Exemption Limit Changes for 2018

While the House and Senate are considering competing tax proposals, including a proposal to eliminate the federal estate tax, it is worth noting that the IRS has released Revenue Procedure 2017-58 which provides inflationary updates for a number of provisions in the Internal Revenue Code, including Estate Tax Exemption Limits.

Assuming that the Republicans do not pass a bill that modifies the existing estate tax and gift tax structure, for 2018:

  1. US Citizens and Permanent Residence Aliens can pass on $5,600,000 per person upon death or during their lifetime.  The federal estate tax exemption is also known by several other terms including the lifetime gift exemption, the basic exclusion amount, and the unified applicable exclusion amount.  The Estate Tax exemption is being increased by $110,000 from its 2017 limit of $5,490,000;
  2. The annual gift tax exclusion will increase to $15,000 per person, per donee.  This is up from $14,000 in 2017; and
  3. The annual exclusion for gifts made to a non U.S. Citizen spouse has been increased to $152,000.  This is up from $149,000 in 2017.

Despite the changes to the estate tax exemption limits and annual gift tax exclusions outlined above, this revenue procedure does not change any laws.  It is simply designed to inform taxpayers of any changes in tax provisions as a result of inflation.