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The IRS recently introduced
new cost of living adjustments to the lifetime federal estate and gift tax
exemption. The new federal estate and gift
tax exemption will be $5.45 million dollars in 2016. This is an increase from the prior exemption
of $5.43 million for 2015. This is
therefore an increase of $20,000.00 that can be passed on by gift or in your
estate, tax free starting in 2015.
Unfortunately, the annual tax free gift
exclusion amount stays at the same level at a total of $14,000.00. This is the annual amount of gifts that can
be given to an individual without counting toward the lifetime consolidated
exemption of $5.45 million for 2016. As
a result, each year you can give up to $14,000.00 to an individual using the
annual gift tax exclusion. These gifts
will not count towards your lifetime exemption amount.
As I have stated before on this blog, estate
taxes are becoming less relevant to the vast majority of Americans due to the
“permanent” fix that was provided by the federal government a few years ago. The estate tax simply does not come into play
for most people. Additionally, the
Tennessee inheritance tax is now abolished in Tennessee for any person who dies
in 2016 or later. It simply does not
exist any longer.
Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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