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Financial Learning Center


Understanding the Basics

Some Basic Estate Tax Concepts

In 2012 the estate and gift tax exemption (per individual) was set to $5.12 million, with a top tax rate of 35 percent. Now in 2019 the highest tax bracket is 40% and the estate and gift tax exemption was increased to $11.4 million lifetime exemption for individuals and $22.8 million for married couples. Up until 2025, these exemption amounts are scheduled to increase with inflation. In 2026 the exemptions are scheduled to go back to the 2017 levels, adjusted for inflation.

With these multiple changes in estate tax laws, it is very important that you consult a trusted and knowledgeable estate and tax professional to help you in your planning decisions.

The unused portion of the estate tax exemption carries over to the surviving spouse. For example, if in 2019 the husband dies and does not fully use his estate tax exemption, the deceased husband's unused exemption can be attributed to the wife, so that when she dies, her estate plan can use both her unused estate tax exemption and her late husband's unused exemption. Thus, a married couple can easily shelter $22.8 million of assets.

See the section Estate and Gift Taxes for more information.

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