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Estate Tax Exemption Changes, But Not Permanently

1-1-2018 - Effective January 1, 2018, the federal lifetime estate and gift tax exemption has doubled. An individual may now pass $11.2 million estate tax free. With portability, a married couple may pass twice that amount, $22.4 million. The increase in the exemption was one of the provisions of the 2017 Tax Cut and Jobs Act.  The tax on excess over those amounts remains unchanged at 40%.

It is important to keep in mind that this is a TEMPORARY change. Per the new law, on January 1, 2026 the estate tax examption will revert to its 2017 levels: $5.6 million per individual, and $11.2 million per married couple (along with inflationary adjustments).

There is also speculation that the estate tax may be adjusted even before 2026, as the new law lack bipartisan support. The outcome of the elections of this year and 2020 could end up reshaping the estate tax exemption levels yet again. Clients' estate plans should be designed with as much flexibility as possible, and be revisited regularly.

More information on federal estate tax.

 

 

 

 

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