The Tax Cuts and Jobs Act increases the exclusion amount for estate and gift taxes.
Prior Law
Through December 31, 2017
For 2017, the estate and gift tax exclusion was $5,490,000 per individual. A surviving spouse may elect to include the deceased spousal unused exclusion amount, resulting in a total potential exclusion of $10,980,000 for the surviving spouse upon death.
New Law
Effective for tax years beginning after December 31, 2017
The Act doubles the base estate and gift tax exclusion amount from $5,490,000 to $10 million. The $10 million amount is indexed for inflation occurring after 2011 and is expected to be approximately $11.2 million in 2018 ($22.4 million for a surviving spouse electing to use the deceased spousal unused exclusion amount).
Commentary
The language in the Act does not mention generation-skipping transfers, but because the generation-skipping transfer tax exemption amount is based on the basic exclusion amount, generation-skipping transfers will also see an increased exclusion amount.
Written by: Matt Cantlon, CPA
