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IRS Announces Inflation-Adjusted Estate and Gift Tax Exclusion Amounts for 2015

The Internal Revenue Service has announced that the 2015 federal estate and gift tax exclusion amount will increase by $90,000, from $5,340,000 to $5,430,000 per person.  This represents how much, in the aggregate, an individual can transfer during life and at death without having to pay a federal estate and gift tax.   The generation-skipping transfer tax exemption tracks the estate and gift tax exclusion and therefore it too will rise to $5,430,000.  These amounts are adjusted annually based on inflation.

The so-called “annual exclusion” amount for gifts will remain at $14,000 for 2015.  This means that the first $14,000 of gifts to any individual in a given year are not considered “taxable gifts” and therefore do not reduce the federal estate and gift tax exclusion.

The first $147,000 of gifts to a spouse who is not a U.S. citizen is not considered a taxable gift.  This is up from $145,000 in 2014.

The Massachusetts estate tax threshold remains at $1,000,000 and is not adjusted for inflation.  Massachusetts does not impose a gift tax.