For 2016, the tax exemption inflation increases for trusts and estates are as follows:
- $5,450,000 federal estate tax and lifetime gift tax exemption (increased from $5,430,000 in 2015) and a 40% top federal estate and gift tax rate
- $5,450,000 GST tax exemption (increased from $5,430,000 in 2015) and a 40% top federal GST tax rate
- $14,000 annual gift tax exclusion (no increase from 2015)
- $148,000 annual exclusion for gifts to a noncitizen spouse (increased from $147,000 in 2015)
As a reminder, unlimited tax-free gifts can be made for medical and educational expenses, but only if the payment is made directly to the medical provider or educational institution.
Gift tax returns for gifts made in 2015 are due on April 15, 2016. You can extend the due date to October 17, 2016, with a timely filed request for an automatic extension to file your 2015 income tax return, which also extends the time to file your gift tax return. However, such extension does not extend the time to pay any such taxes due.