IRS Releases 2016 Inflation Adjusted Gift and Estate Tax Amounts

November 10, 2015Articles Estate Planning Blog

The IRS has announced the 2016 inflation adjustments to many tax items. Among these on the estate and gift tax side:

  • The unified estate and gift tax exemption amount is $5,450,000 (up from $5,430,000 in 2015).
  • The exemption from GST tax is $5,450,000 (up from $5,430,000 in 2015).
  • The gift tax annual exclusion remains at $14,000.
  • The annual exclusion for gifts made to noncitizen spouses is $148,000 (up from $147,000 in 2015).

As mentioned in previous posts, these increased exemptions provide many planning opportunities, including the following:

  • Leveraging the increased exemptions to make gifts of business interests that are subject to valuation discounts to benefit family members.
  • Using the increased exemptions to make gifts or sales to intentionally defective grantor trusts.
  • Using the increased exemptions to make outright gifts to children and grandchildren.

The annual inflation increase to the estate, gift and GST tax exemptions also reminds us of the need to revisit yearly gifting programs to make sure that no tax free wealth transfer opportunities are being wasted.