The IRS has announced the inflation adjustments for 2017 for important estate planning and income tax thresholds. Here are some of the key adjustments that affect estate plans:
The estate and gift tax exclusion amount will increase to $5,490,000.
The generation skipping tax exemption also increases to $5,490,000.
The gift tax annual exclusion amount stays at $14,000.
The annual exclusion for gifts to a non-citizen spouse increases to $149,000.
Special use valuation under Section 2023A: decrease cannot exceed $1,120,000.
Marginal tax rates for taxable income of estates and trusts:
Not over $2,550 15% of taxable income
$2,550-$6,000 $382.50 plus 25% of excess over $2,550
$6,000-$9,150 $1,245 plus 28% of excess over $6,000
$9,150-$12,500 $2,127 plus 33% of excess over $9,150
Over $12,500 $3,232.50 plus 39.6% of excess over $12,500
As you can see, some rates are indexed to inflation and others are not. For more detailed information, visit the IRS website, IRS.gov. The effect of enacted tax reform legislation will undoubtedly change some or perhaps all of these figures. Stay tuned.