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Estate And Gift Tax Rules Change

On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act that made the following major changes to the estate and gift tax rules:

Estate tax:

1. The estate tax applicable exclusion amount increased from $5,490,000 to $11,200,000 per person (with inflation the exclusion amount has increased to $12,920,000). The exclusion will continue to be adjusted for inflation. The estate tax applicable exclusion amount will revert to $5,000,000 (as adjusted for inflation) on January 1, 2026.
2. If a decedent does not use all of their estate tax applicable exclusion amount, either during their life or at the time of their death, any unused exclusion may be ported (transferred) to the surviving spouse on a timely filed estate tax return.
3. The top estate tax rate remains 40%.

Gift tax:

1. The lifetime gift tax exemption amount increased from $5,490,000 to $11,200,000 per person (with inflation, the exclusion amount has increased to $12,920,000). The gift tax exemption amount will revert to $5,000,000 (as adjusted for inflation) on January 1, 2026.
2. The annual gift tax exemption for 2023 is $17,000 per person. This amount will continue to be adjusted for inflation.
3. The top gift tax rate remains 40%.