Inflation Adjustments for 2017

With the release of the Consumer Price Index for August 2016, it’s possible to calculate various inflation adjustments for 2017. The following are the significant federal estate planning numbers:

  • The base applicable exclusion amount (and generation-skipping tax exemption) will be $5,490,000.
  • The annual gift tax exclusion will be $14,000 (i.e., no change).
  • The annual gift tax exclusion for a non-citizen spouse will be $149,000.
  • The “2 percent” amount for purposes of section 6166 will be $1,490,000.
  • The limitation on the valuation reduction under section 2032A will be $1,120,000.
  • The top (39.6%) income tax bracket for estates and trusts will begin at $12,500.
  • The alternative minimum tax exemption for an estates and trusts will be $24,100.

[Update:  The Internal Revenue Services confirmed these numbers, and published other inflation adjustments, in Rev. Proc. 2016-55., 2016-45 I.R.B. 707  (11/7/2016).]

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