Estate tax and gift tax exemptions may rise in 2018

On Behalf of | Sep 29, 2017 | estate tax, Firm News

Couples in North Carolina and throughout America may see their joint federal estate tax exemption climb above $11 million in 2018. It is also likely that the gift tax exemption will increase to $15,000 for 2018, which would mark the first increase since 2013. The federal estate tax exemption is indexed to inflation, and was first set at $5 million in 2011.

For 2017, the exemption was set at $5.49 million per person while the gift tax exemption has been at $14,000 since 2013. Any gifts over the exclusion amount are applied toward a person’s federal estate tax exemption. While this may make it easier for some to avoid paying the 40 percent federal estate tax rate on some or all of their assets, many are looking forward to eliminating estate taxes altogether. President Trump has called for an end to the tax.

Videos made by ranchers in Nebraska and California talk about how estate taxes may make it harder to transfer their land to future generations. There have also been lobbying efforts by other groups to abolish the tax as well. However, there is opposition to this goal by Democrats who don’t want to see another tax cut that benefits the 1 percent. A professor from the NYU School of Law says that the estate tax does much to reduce income inequality in the country.

When a person dies, his or her estate may owe taxes that are generally payable before assets are distributed. There may be ways to reduce the value of an estate such as making planned gifts or putting assets in a trust. An attorney may be able to help reduce the odds of problems with the IRS.