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.
