The Internal Revenue Service has announced that the basic exclusion amount for determining the unified credit against the estate, gift, and generation-skipping transfer (GST) tax in 2019 is $11,400,000. This amount is based on a $10,000,000 exclusion amount under Code Section 2010, adjusted for inflation. Therefore, starting next year, decedents having a gross estate worth less than $11,400,000 will not owe federal estate, gift, or GST tax. For married couples, the basic exclusion amount is “portable,” meaning that if a portability election is made on a timely filed estate tax return for the first decedent spouse, the surviving spouse will be able to add the first deceased spouse’s unused exemption (“DSUE”) to his or her own. In 2019, a married couple leaving a combined gross estate worth less than $22,800,000 will be able to avoid owing federal estate, gift, and GST tax.
Under the so-called “Tax Cuts and Jobs Act” of 2017, the basic exclusion amount will sunset after the year 2025 without further act of Congress. This means that unless another law is passed, in 2026 the basic exclusion amount will return to $5,000,000, adjusted for inflation. For persons who are not United States citizens or legal residents (green card holders), the basic exclusion amount for determining the unified credit against the United States federal estate tax remains limited to only $60,000 unless treaty relief is available.
The annual gift exclusion for 2019 remains at $15,000, meaning that the first $15,000 of any gift made to any individual during the calendar year is not counted as a taxable gift.