You may recall that the 2017 Republican tax reform legislation roughly doubled the estate and gift tax exemption.
This means starting in 2019, people are permitted to pass on, tax-free, $11.4 million from their estate and gifts they give before their death. Couples can pass on twice that amount, or $22.8 million.
These higher levels expire in 2026, but those who make large gifts while the exemption is higher and die after it goes back down, won’t see the estate tax benefit eroded, the IRS announced recently via new regulations.
“As a result, individuals planning to make large gifts between 2018 and 2025 can do so, without concern that they will lose the tax benefit of the higher exclusion level once it decreases after 2025,” the agency said in a press release.
Yahoo Finance’s recent article, “IRS Says Millionaires Can Keep Estate Tax Benefits After 2025,” says that the exemption increase was a big priority for Republicans in the 2017 tax overhaul.
This exemption decreased the number of individuals who’d be subject to the 40% estate tax by about two-thirds.
The exemption was $5.5 million prior to the law change.
However, Democrats are looking to reverse those changes, if they sweep the House, Senate and White House in the 2020 national elections.
Nearly every Democratic presidential candidate would like to see the estate tax apply to a greater number of wealthy families.
Senator Bernie Sanders has called for the estate tax, to begin when fortunes are worth at least $3.5 million. He has also proposed rates as high as 77%.
Reference: Yahoo Finance (November 22, 2019) “IRS Says Millionaires Can Keep Estate Tax Benefits After 2025”