Inflation Adjustments for 2019

With the release of the Chained Consumer Price Index (C-CPI-U) for August 2018, it’s possible to calculate various inflation adjustments for 2019. The following are the significant federal estate planning numbers, with the numbers for 2018 shown in parentheses:

  • The base applicable exclusion amount (and generation-skipping tax exemption) will be $11,400,000 (was $11,180,000 for 2018).
  • The annual gift tax exclusion will be $15,000 (was $15,000, so unchanged).
  • The annual gift tax exclusion for a non-citizen spouse will be $155,000 (was $152,000).
  • The “2 percent” amount for purposes of section 6166 will be $1,550,000 (was $1,520,000).
  • The limitation on the special use valuation reduction under section 2032A will be $1,160,000 (was $1,140,000).
  • The top (37%) income tax bracket for estates and trusts will begin at $12,700 (was $12,500).
  • The alternative minimum tax exemption for a estates and trusts will be $25,000 (was $24,600), and the phaseout of the exemption will start at $83,500 (was $81,900).

The Internal Revenue Service will publish the official inflation adjustments in a Revenue Procedure in 4-8 weeks.

[Update on 11/16/18: The income tax brackets and exemptions shown in the last two items above are not correct, and the correct numbers can be found in the report on the official adjustments published in the Rev. Proc. from the Internal Revenue Service.]

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