November 2017

Legal Update: IRS Announces Increases in Estate and Gift Tax Exemptions for 2018


Although the fate of the estate tax, GST tax and gift tax remains unclear as Congress debates tax reform, life goes on at the IRS. Each year the IRS is required to adjust certain tax-related figures for inflation and on October 19, 2017 the IRS announced those adjustment figures, including the below adjustment amounts related to estate and gift taxes.

  • Estate Tax/Gift Tax/GST Tax Exemption Increases to $5,600,000. For decedents dying in 2018, and for gifts made during 2018, the combined estate and gift tax exemption will increase to $5,600,000 from its current $5,490,000. This means that with proper planning, a married couple can pass at least $11,200,000 of their combined net worth to their children without estate tax. The GST exemption will also increase to $5,600,000
  • Gift Tax Annual Exclusion Increases to $15,000. For gifts made in 2018, the gift tax annual exclusion will increase to $15,000 from $14,000. This is the amount an individual can give to as many recipients as desired in one year without using any of his/her estate and gift tax exemption (i.e., gifts of $15,000 or less in 2018 do not count towards the $5,600,000 exemption). This means that a married couple can give each recipient up to $30,000 in 2018 without using either spouse’s estate and gift tax exemption amount.
  • Gift Tax Annual Exclusion for Gifts to Non-U.S. Citizen Spouses. Gifts to spouses who are United States citizens are not subject to gift tax (i.e., there is an unlimited exclusion). For gifts to spouses who are not U.S. citizens, however, there is a limit, and this amount will increase to $152,000 from $149,000. Gifts in excess of that amount will use gift and estate tax exemption.

These adjustments are included in IRS Revenue Procedure 2017-58, which will be published in the Internal Revenue Bulletin on November 6, 2017.