It’s official. For 2018, the estate and gift tax exemption is $5.6 million per individual, an increase from $5.49 million in 2017. That means an individual can leave $5.6 million to heirs and pay no federal estate or gift tax. A married couple will be able to shield $11.2 million from federal estate and gift taxes. And the annual gift exclusion amount is $15,000 for 2018, the first increase in five years. If you make lifetime gifts over that amount, they count against the estate tax exemption amount, which is actually a combined estate/lifetime gift exclusion amount. It has adjusted for inflation every year since 2011 when the base level was set at $5 million. The federal estate and gift tax exemptions rise with inflation.
There are many people that are still hoping for an estate tax repeal. President Donald Trump’s tax plan outline released in April and the House GOP plan both call for the elimination of the estate tax altogether, but there is much dissent on repealing the tax intended to reduce dynastic wealth. On the other side, the estate tax has been touted as one of the most important features of the tax system to reduce inequality.