Early Predictions About 2016 Estate Tax, Gift Tax, GST Tax and Annual Gift Tax Limits

Under current law the federal estate tax, gift tax, and generation-skipping transfer tax exemptions have become unified and are indexed for inflation on an annual basis. Since 2011, the exemption and tax rate have changed as follows:

Posted on October 1, 2015 (updated on November 26, 2024)

Chart showing historical changes in estate tax exemptions and rates from 2011 to 2015 and analyzing the potential 2016 predictions for estate planning and elder law.

Year	Exemption	Tax Rate
2011	$5,000,000	35%
2012	$5,120,000	35%
2013	$5,250,000	40%
2014	$5,340,000	40%
2015	$5,430,000	40%

The annual exclusion from gift taxes is also indexed for inflation on an annual basis but only in $1,000 increments. Since 2011, the annual gift tax exclusion has changed as follows:

Year	Exclusion
2011	$13,000
2012	$13,000
2013	$14,000
2014	$14,000
2015	$14,000

While the IRS will not officially release the 2016 inflation-indexed exemption and exclusion until later in October, Wolters Kluwer Tax & Accounting has released its 2016 predictions based on historical inflationary trends. According to Wolters, the exemption should end up at $5,450,000 in 2016, or $10,900,000 for married couples. While this is a mere $20,000 per individual / $40,000 per married couple increase over the 2015 exemption, it is a whopping $450,000 per individual / $900,000 per married couple increase since 2011. Unfortunately, Wolters anticipates that the annual gift exclusion will remain at $14,000 for 2016.
Wealthy individuals and couples should continue to monitor these inflation-indexed numbers and plan accordingly. We will update you on the official 2016 numbers once they are released by the IRS.