2015 Estate And Gift Tax Update

On October 30, 2014, the IRS released Revenue Procedure 2014-61, which announced inflation adjustments to the applicable exclusion amount beginning in 2015. For an estate of any decedent dying during calendar year 2015, the applicable exclusion is increased from $5.34 million to $5.43 million.  This change increases not only the applicable exclusion amount available at death, but also a taxpayer’s lifetime gift applicable exclusion amount and generation skipping transfer exclusion amount.  This means a husband and wife with proper planning could transfer $10.86 million estate, gift and GST tax free to their children and grandchildren in 2015.

The estate, gift and GST tax rate remains the same at 40% and the gift tax annual exclusion remains at $14,000.

While the New Jersey state exclusion amount remains unchanged at $675,000, the New York exclusion amount was changed as of April 1, 2014.  Beginning April 1, 2014, the exclusion is as follows:

• $2.0625 million for decedents dying between April 1, 2014 through March 31, 2015;
• $3.125 million for decedents dying between April 1, 2015 through March 31, 2016;
• $4.1875 million for decedents dying between April 1, 2016 through March 31, 2017;
• $5.25 million for decedents dying between April 1, 2017 through December 31, 2018.  Beginning in 2019, the exclusion would be indexed for inflation, and equal to the Federal exclusion.

The gift tax annual exclusion to a non-citizen spouse has been increased from $145,000 to $147,000.  While gifts between spouses are unlimited if the donee spouse is a United States citizen, there are restrictions when the donee spouse is not a United States citizen.

Other items of note that also are subject to inflationary adjustment in 2015 include the social security wage base, which increases from $117,000 in 2014 to $118,500 in 2015, and the maximum amount that can be deferred into a 401(k) from $17,500 to $18,000.