Estate Tax and Estate / Trust Income Tax update for 2015

The IRS released Rev. Proc. 2014-61, which contains the 2015 adjustments for the federal estate tax, gift tax, and generation-skipping transfer tax exemptions as well as the 2015 annual gift tax exclusions:

1) The estate tax exemption will increase from $5,340,000 in 2014 to $5,430,000 in 2015 The top estate tax rate will be 40%. The lifetime gift tax exemption and generation-skipping transfer tax exemptions are the same with the same top rate.

2) The annual gift tax exclusion will remain at $14,000 in 2015.

3) The annual gift tax exclusion for gifts to noncitizen spouses will increase to $147,000 in 2015.

In addition, Rev. Proc. 2014-61 provides that estates and trusts will be subject to the following income tax brackets in 2015:

1) If the income is not over $2,500.00, the tax rate is 15%.

2) If the taxable income is over $2,500 but not over $5,900, then the tax is $375 plus 25% of the excess over $2,500.

3) If the taxable income is over $5,900 but not over $9,050, then that tax is $1,225 plus 28% of the excess over $,5900.

4) If the taxable income is over $9,050 but not over $12,300, then the tax is $2,107 plus 33% of the excess over $9,050.

5) If the taxable income is over $12,300, then the tax is $3,179.50 plus 39.6% of the excess over $12,300.

Daniel H. Alexander, Attorney www.dalexander.com

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