With the passage of the 2017 Tax Act on December 22, 2017, the lifetime estate and gift tax basic exclusion amount (also sometimes called the gift and estate tax exemption amount, the applicable exclusion amount, or the unified credit amount) was increased. The scale used to annually adjust for inflation was also changed.
Applicable Exclusion Amount
Under the 2010 Tax Relief Act, the lifetime estate and gift tax basic exclusion amount was $5,000,000 and this amount was indexed for inflation after 2011 and increased over time as shown below. Under the 2017 Tax Act, the basic exclusion is increased from $5,000,000 to $10,000,000 for 2018 and the $10,000,000 is indexed for inflation occurring after 2011. This inflation adjustment results in a 2018 applicable exclusion amount of $11,180,000. Congress included a sunset provision in the 2017 Tax Act so the exclusion amount returns to the 2017 exclusion amount (adjusted for inflation) in 2026.
Annual Exclusion Gift Amount
The gift tax annual exclusion (also simply called the annual exclusion) was not changed by the new act, but will be adjusted for inflation in 2018. The gift tax annual exclusion will increase for 2018 to $15,000. This gift tax annual exclusion was indexed for inflation in 1997 and has increased over time as shown below.
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