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Tax Tip of the Week | No. 445 | Tax Cuts and Jobs Act – Estate and Gift Tax Changes January 31, 2018

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Tax Tip of the Week | Jan 31, 2018 | No. 445 | Tax Cuts and Jobs Act – Estate and Gift Tax Changes

Congress debated at length as to whether the estate and gift taxes would survive. And, if they did – what new look might they have. In the final version of the Tax Cuts and Jobs Act as signed into law by the President on December 22, 2017, the estate and gift taxes did survive but with significant increases to their exclusion amounts.

Pre-act law – The lifetime estate exclusion amount was originally $5,000,000 and adjusted for inflation after the year 2011. This exclusion amount was $5,490,000 for the 2017 year and scheduled to be $5,600,000 for 2018 or $11,200,000 for a married couple if portability was elected. The annual gifting exclusion is $14,000 for 2017. This exclusion is adjusted for inflation but our low inflation rates and the fact that it is adjusted only in increments of $1,000 has left it unchanged since 2013.

New law – After December 31, 2017 and before January 1, 2026 (a sunset provision), the Tax Cuts and Jobs Act has effectively doubled the previous lifetime exclusion amount. The new amount is expected to be about $11,200,000 in 2018 or $22,400,000 for a married couple.

Note: Although the Act is silent on generation skipping transfers one may expect to see an increased exclusion amount here as well.

The annual gifting exclusion is now $15,000 for gifts made in 2018. This change from $14,000 to $15,000 is not a result of the new tax law but a result of inflation adjustments.

We enjoy your questions, comments and suggestions for future topics. You may contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.

This week’s author – Mark Bradstreet, CPA

–until next week.

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