The estate and gift tax exemptions skyrocketed in 2017, as the result of changes to the tax law. The increases mean that in 2019, individuals may pass on $11.4 million from their estate and gifts they gave before their death. That level expires in 2026, unless laws change. However, the IRS announced regulations that said individuals who make large gifts while the exemption is higher and die after it goes back down, won’t see the estate tax benefit eroded.
“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.
Candidate and Senator Bernie Sanders wants to see the estate tax start at $3.5 million and would set rates as high as 77% for the wealthy.
Reference: Yahoo Finance (November 22, 2019) “IRS Says Millionaires Can Keep Estate Tax Benefits After 2025”