December 9, 2018

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Inflation Adjustments: A Safe Conversation for the Thanksgiving Table

It’s that time of year again when people’s thoughts turn to…inflation adjustments! The Internal Revenue Service (IRS) recently announced the annual inflation adjustments for more than 60 tax provisions for the year 2019, including key estate, gift, and generation-skipping transfer tax ("GST") exclusion amounts. To assist you in your planning, we are happy to report these federal adjustments as well as to report the adjustments that will be made in 2019 in Connecticut, Massachusetts and New York.

Federal Law

For calendar year 2019, the federal applicable exclusion amount will increase from $11.18 million to $11.4 million. This change increases (i) the applicable exclusion amount available at death, (ii) each person’s lifetime gift applicable exclusion amount, and (iii) each person’s GST applicable exclusion amount. This means that in 2019, a married couple with proper planning will be able to transfer a combined total of $22.8 million free of estate, gift and GST tax to their beneficiaries.

The federal estate, gift and GST rates remain at 40%, and the per-donee gift tax annual exclusion will also remain at $15,000.

The federal gift tax annual exclusion amount for gifts to a non-citizen spouse will increase to $155,000 in 2019. Please note that gifts between spouses remain unlimited if the recipient spouse is a United States citizen.

Connecticut

In 2019, the Connecticut estate and gift tax exemption will increase from $2.6 million to $3.6 million. The Connecticut estate tax rates will range from 7.8% to 12%, as illustrated in the following table:

 

Value of Taxable Estate or Gift

 

Marginal Rates

 

 

PA 18-81, Sections 66-68, effective May15, 2018

2019

2020

2021

2022

2023

Up to $3,600,000

None

 

 

 

 

$3,600,001 to $4,100,000

7.8%

None

 

 

 

$4,100,001 to $5,100,000

8.4%

 

None

 

 

$5,100,001 to $6,100,000

10.0%

10.0%

 

None

 

$6,100,001 to $7,100,000

10.4%

10.4%

 

 

None

$7,100,001 to $8,100,000

10.8%

10.8%

10.8%

 

 

$8,100,001 to $9,100,000

11.2%

11.2%

11.2%

 

 

$9,100,001 to $10,100,000

11.6%

11.6%

11.6%

11.6%

 

Over $10,100,000

12.0%

12.0%

12.0%

12.0%

 

Federal Basic Exclusion

12.0%

12.0%

12.0%

12.0%

 

Over Federal Basic Exclusion

12.0%

12.0%

12.0%

12.0%

12.0%

Massachusetts

The Massachusetts estate tax exemption is and will remain at $1 million in 2019. The
Massachusetts estate tax rates range from 5.6% to 16%. Massachusetts has no gift tax, although taxable gifts are included in the estate tax calculation and therefore may affect the estate tax that is imposed.

New York

The New York estate tax basic exclusion amount for a person dying during calendar year 2019 will increase from $5.25 million to $5.74 million. Also, for any decedent who dies after December 31, 2018, the amounts of any gifts, whenever given, will no longer be included in the calculation of that person’s New York gross estate.

© Copyright 2018 Murtha Cullina

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About this Author

The Trusts & Estates Department of Murtha Cullina LLP provides personal assistance to clients in lifetime planning and asset accumulation, estate and gift planning and the administration of estates and trusts.  We have extensive experience employing sophisticated tax planning strategies, and we emphasize a personally tailored approach to our clients' needs and concerns, rather than pre-packaged, general solutions.

We are proud of the individual attention we give to each client's personal, financial and family circumstances in providing expert tax and estate planning advice.  We...

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