2016 Federal Estate Tax Exemption and Gift Tax Exclusions Announced

The Internal Revenue Service (“IRS”) has announced that the estate tax exemption amount for 2016 will be $10.9 million per married couple and $5.45 million per individual.  This is an increase of $110,000 per individual – up from $5.34 million per individual in 2015. 

The annual maximum gift tax exclusion amount remains unchanged at $14,000 per individual.  This means that a couple with two children may gift up to $28,000 per child and none of the money gifted would count toward the maximum lifetime gift tax exemption amount.  The lifetime exclusion amount for gifts will be $5.45 million in 2016 as well.

This information is important for estate planners and individuals interested in long-term planning as amounts gifted or transferred after-death that exceed the exemption and exclusion limits may be taxed up to 40%.