With the release of the Chained Consumer Price Index (C-CPI-U) for August 2019, it’s possible to calculate various inflation adjustments for 2020. The following are the significant federal estate planning numbers, with the numbers for 2019 shown in parentheses:
- The base applicable exclusion amount (and generation-skipping tax exemption) will be $11,580,000 (was $11,400,000 for 2019).
- The annual gift tax exclusion will be $15,000 (unchanged).
- The annual gift tax exclusion for a non-citizen spouse will be $157,000 (was $155,000).
- The “2 percent” amount for purposes of section 6166 will be $1,570,000 (was $1,550,000).
- The limitation on the special use valuation reduction under section 2032A will be $1,180,000 (was $1,160,000).
- The top (37%) income tax bracket for estates and trusts will begin at $12,950 (was $12,750).
- The alternative minimum tax exemption for estates and trusts will be $25,400 (was $25,000), and the phaseout of the exemption will start at $84,800 (was $83,500).
The Internal Revenue Service will publish the official inflation adjustments in a Revenue Procedure in 4-8 weeks.
Update (11/6/2019): The Internal Revenue Service has published Rev. Proc. 2019-44 with the official inflation adjustments for 2020, and the official adjustments match the unofficial adjustments shown above.