Estate Tax Exemptions and Estate Tax. Despite much discussion, the Estate Tax is not repealed. However, the Act increased the Exclusion amount for Estate Tax, Gift Tax and Generation-Skipping Tax from $5,490,000 per person in 2017, to $11,200,000 per individual (or, $22,400,000 for a married couple), starting in 2018.
Sunset provisions: the increased exemptions are set expire on December 31, 2025, when they are to revert to the current $5 million exemption beginning on January 1, 2026, still indexed for inflation – unless Congress acts to extend them. This presents a great opportunity to make gifts – high net worth individuals may take advantage of the increased exemptions by making gifts up the maximum available exemption amount.
The 40% tax rate for Estate/Gift/GST tax remains the same.
Portability remains: a surviving spouse may still elect to claim and use a deceased spouse’s unused exclusion amount by filing an Estate Tax Return and electing Portability within nine months of death.
The annual Gift Tax Exclusion will still increase to $15,000 in 2018.
The Step-up-in-Cost-Basis rules remain unchanged.
Charitable Deductions. Gifts to charity remain deductible, and the amount of cash donations to public charities increase from 50% to 60% of adjusted gross income.
Alimony Deductions are eliminated by the Act, as well as the corresponding inclusion in income of the alimony-recipient, effective for divorce decrees and separation agreements entered into after December 31, 2018.
529 Plans. Qualified higher education expenses for 529 Plans now will include tuition in connection with enrollment at an elementary or secondary public, private or religious school.