New Estate Exemption Amount Finalized for 2018

The exact amount of the estate and gift tax exemption for 2018 was in limbo until just
recently.

You know that the Tax Cuts and Jobs Act doubled the individual estate and gift tax exemption for 2018. Not everyone realized that the method for inflation indexing the amount also was changed in the law, and for the estate and gift tax exemption it was changed retroactive to 2010. The IRS had to recalculate the exemption amount for 2018; it couldn’t simply double the amount it already had calculated for 2018 under the old inflation-indexing method.

In February, the IRS issued the final amount for 2018. The estate and gift tax exemption amount for an individual in 2018 is $11.180 million. A married couple can jointly exempt $22.360 million if the first spouse to pass away exercises the portability election for any unused exemption amount.