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2015 Estate & Gift Tax Exemption

 

In late October the IRS released the 2015 estate and gift tax exemption amounts for 2015 (IRS Revenue Procedure 2014-61). These are important numbers because they provide the limits that taxpayers must follow in order to be exempt or avoid federal taxes on wealth transfer. Each year the IRS assesses a number of factors to determine if the exemption limits should be adjusted for inflation. For 2015, the IRS decided to make the following changes:

 

  • Federal Estate Tax Exemption – This is the amount of money that can be left in an estate without it being subject to federal income tax. According to the recent announcement, the estate tax exemption has increased to $5.43M in 2015 representing a $90,000 increase over the 2014 exemption limit. Remember, that the exemption applies to each person so a couple will have a combined exemption of $10.86M under the new guidelines.
  • Estate Top Tax Rate – This is the highest rate that an estate can be taxed at when assets are transferred. The IRS announced that the top tax rate will be set at 40% for 2015.
  • Annual Gift Tax Exclusion – For 2015 the IRS has left the exclusion the same as 2014 at $14,000 per individual per gift. This means a husband and wife can make separate gifts to their two grandchildren of $14,000 for a total of $56,000 in a calendar year and not be taxed on the gift. The last time the annual exclusion was increased was in 2013 when it was raised from $13,000 to $14,000.

 

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Unsure how the estate and gift tax exemption increases will impact your estate plan? The new exemption rate could present opportunities for your planning process. Contact us today, we want to help!  We look forward to speaking with you soon.