Major Estate Tax Changes in New Tax Cut

Much of the discussion about the recently passed tax cut has focused on the changes to the income tax. This is warranted given the amount of money involved with the income tax changes. However, if you are one of those, now fewer, taxpayers who still have to worry about
the federal estate tax, there was some good news in the new law for you also.  The major change was an increase in the basic exclusion amount from $5,490,000 in 2017 to $11,180,000 in tax year 2018. The effect of this increase will likely mean far fewer taxable estates for the next several years. It also means that taxpayers who had potentially taxable estates in
2017, may no longer need to worry about the federal estate tax. I will stress “may” because, like
all of the personal income tax changes under the tax cut, the increased basic exclusion amount
is set to sunset at the end of 2025 and return to the prior amount ($5,490,000 adjusted for the
intervening inflation). Any chance those changes are made permanent? Stay tuned!
One other change of note, but unrelated to the tax cut, the annual gift tax exclusion amount increased to $15,000.00 in 2018. These increases in the annual exclusion amount will likely come slower than they have in the past because of a change in the way future inflation
adjustments will be calculated. Bottom line is that we are probably looking at $15,000.00 for
the foreseeable future as long as inflation remains relatively tame.

If you have any question regarding this article or other tax changes please contact John Clough at jclough@pselaw.com or call 937-223-1130.

AUTHOR: John Clough
jclough@pselaw.com