After 2 years of “what ifs” and “then whats,” we finally have resolution regarding the estate and gift tax exemptions. As a result of the last minute “Fiscal Cliff” legislation, starting January 1, 2013, the individual lifetime estate and gift tax exemption is $5,250,000, adjusted for inflation from 2012’s $5,120,000 exemption. In addition, the maximum estate/gift tax rate is 40% for an estate and/or gift(s) exceeding the lifetime exemption amount (increased from the 2012 maximum rate of 35%).
Although unrelated to the “Fiscal Cliff” legislation, the annual gift tax exemption is now $14,000 (increased from $13,000 in 2012).