November 20, 2018
It’s that time of year again when people’s thoughts turn to…inflation adjustments! The Internal Revenue Service (IRS) recently
announced the annual inflation adjustments for more than 60 tax provisions for the year 2019, including key estate, gift, and
generation-skipping transfer tax ("GST") exclusion amounts. To assist you in your planning, we are happy to report these federal adjustments as well as to report the adjustments that will be made in 2019 in Connecticut, Massachusetts and New York.
Federal Law
For calendar year 2019, the federal applicable exclusion amount will increase from $11.18 million to $11.4 million. This change increases (i) the applicable exclusion amount available at death, (ii) each person’s lifetime gift applicable exclusion amount, and (iii) each person’s GST applicable exclusion amount. This means that in 2019, a married couple with proper planning will be able to transfer a combined total of $22.8 million free of estate, gift and GST tax to their beneficiaries.
The federal estate, gift and GST rates remain at 40%, and the per-donee gift tax annual exclusion will also remain at $15,000.
The federal gift tax annual exclusion amount for gifts to a non-citizen spouse will increase to $155,000 in 2019. Please note that gifts between spouses remain unlimited if the recipient spouse is a United States citizen.
Connecticut
In 2019, the Connecticut estate and gift tax exemption will increase from $2.6 million to $3.6 million. The Connecticut estate tax rates will range from 7.8% to 12%, as illustrated in the following table:
| Value of Taxable Estate or Gift | Marginal Rates | ||||
|---|---|---|---|---|---|
| PA 18-81, Sections 66-68, effective May 15, 2018 | |||||
| 2019 | 2020 | 2021 | 2022 | 2023 | |
| Up to $3,600,000 | None | ||||
| $3,600,001 to $4,100,000 | 7.8% | None | |||
| $4,100,001 to $5,100,000 | 8.4% | None | |||
| $5,100,001 to $6,100,000 | 10.0% | 10.0% | None | ||
| $6,100,001 to $7,100,000 | 10.4% | 10.4% | None | ||
| $7,100,001 to $8,100,000 | 10.8% | 10.8% | 10.8% | ||
| $8,100,001 to $9,100,000 | 11.2% | 11.2% | 11.2% | ||
| $9,100,001 to $10,100,000 | 11.6% | 11.6% | 11.6% | 11.6% | |
| Over $10,100,000 | 12.0% | 12.0% | 12.0% | 12.0% | |
| Federal Basic Exclusion | 12.0% | 12.0% | 12.0% | 12.0% | |
| Over Federal Basic Exclusion | 12.0% | 12.0% | 12.0% | 12.0% | 12.0% |
Massachusetts
The Massachusetts estate tax exemption is and will remain at $1 million in 2019. The
Massachusetts estate tax rates range from 5.6% to 16%. Massachusetts has no gift tax, although taxable gifts are included in the estate tax calculation and therefore may affect the estate tax that is imposed.
New York
The New York estate tax basic exclusion amount for a person dying during calendar year 2019 will increase from $5.25 million to $5.74 million. Also, for any decedent who dies after December 31, 2018, the amounts of any gifts, whenever given, will no longer be included in the calculation of that person’s New York gross estate.
Please contact your Murtha Cullina estate planning attorney to discuss the impact of these developments on your estate plan in more detail.
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