2016 Estate Tax Update

Estate Planning, Recent News, Tax, ,

Federal Estate Tax, Gift Tax, and Generation-Skipping Tax (GST) Exemptions

For 2016, the federal estate and gift tax exemption is $5,450,000 million per individual.  This is an increase over the 2015 exemption, which was $5,430,000 per person.  This means an individual can shield up to $5.45 million from federal estate and gift tax and a married couple will be able to shield $10.9 million.  Estates and lifetime gifts in excess of this amount are subject to a 40% tax.

State Estate Tax Exemption

The 2015 Washington state estate tax exemption is $2,054,000 per person.  Washington has yet to officially release the exemption amount for 2016.  Stay tuned.   Washington estates in excess of the exemption amount are subject to a 10% – 20% Washington State Estate Tax.  Washington doesn’t currently impose a gift tax.

Even though the state estate tax exemption has been incrementally increased over the years to $2,054,000, the filing threshold for the Washington State Estate and Transfer Tax Return remains at $2,000,000.  Each estate over $2,000,000 is required to file a Washington State Estate and Transfer Tax Return.

Federal Gift Tax Annual Exclusion

The annual exclusion against federal gift tax remains at $14,000 for 2016.

Federal and State Tax Summary

The chart below outlines the federal and state exemptions and tax rates for 2011 through 2016.

Estate Tax Chart