IRS Releases 2015 Estate Tax Exemption and Other Related Inflation Adjustments

Last week the IRS released Rev. Proc. 2014-61, which contains the 2015 inflation adjustments for the federal estate tax, gift tax, and generation-skipping transfer tax exemptions as well as the 2015 annual gift tax exclusions:

  • The estate tax exemption will increase from $5,340,000 in 2014 to $5,430,000 in 2015 (for those of you who are slightly dyslexic like me, these numbers will undoubtedly drive you crazy).  The top estate tax rate will remain at 40%.
  • The lifetime gift tax exemption will also increase from $5,340,000 in 2014 to $5,430,000 in 2015.  The top gift tax rate will remain at 40%.
  • The generation-skipping transfer tax exemption will also increase from $5,340,000 in 2014 to $5,430,000 in 2015.  The top generation-skipping transfer tax rate will remain at 40%.
  • The annual gift tax exclusion will be $14,000 in 2015, which is the same as the 2014 exclusion.  As mentioned above, the top gift tax rate will remain at 40%.
  • The annual gift tax exclusion for gifts to noncitizen spouses will increase from $145,000 in 2014 to $147,000 in 2015.  As mentioned above, the top gift tax rate will remain at 40%.

In addition, Rev. Proc. 2014-61 provides that estates and trusts will be subject to the following income tax brackets in 2015:

If Taxable Income Is:                  The Tax Is:

Not over $2,500 15% of taxable income
Over $2,500 but not over $5,900 $375 plus 25% of the excess over $2,500
Over $5,900 but not over $9,050 $1,225 plus 28% of the excess over $,5900
Over $9,050 but not over $12,300 $2,107 plus 33% of the excess over $9,050
Over $12,300 $3,179.50 plus 39.6% of the excess over $12,300

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