2017 Limits for Federal Estate and Gift Tax Exemptions; Tennessee Inheritance Tax Abolished since 2016

The IRS has introduced new cost of living adjustments to the federal estate and gift tax exemption someone can use over their lifetime.  The new federal estate and gift tax exemption will be $5.49 million dollars in 2017.  This is an increase from the prior exemption of $5.45 million for 2016.  As a result, an additional $40,000.00 can be passed on by gift or in your estate, tax free starting in 2017. 

Unfortunately, the annual tax free gift exclusion amount stays at the same level at a total of $14,000.00 (this amount has been in place since 2013).  This is the annual dollar amount of gifts that can be given to an individual without counting toward the lifetime consolidated exemption of $5.49 million for 2017.  As a result, each year you can give up to $14,000.00 to an individual using the annual gift tax exclusion (in fact a married couple can each give the $14,000.00 – totaling $28,000.00 for each calendar year).  These gifts will not count towards your lifetime exemption amount for the Federal Estate tax.

Estate taxes are becoming less relevant to the majority of Americans due to the “permanent” fix that was provided by the federal government a few years ago.  The estate tax simply does not impact the vast majority of people.  Additionally, the Tennessee inheritance tax is now abolished in Tennessee for any person who dies in 2016 or later.  It simply does not exist any longer.  So there are no separate considerations needed to handle any Tennessee inheritance tax.