Heckscher, Teillon, Terrill & Sager, P.C.
Home West Conshohocken Attorney About Us Attorneys Client Information Publications Firm News Staff Directory Directions


On October 25, 2016, the IRS released Rev. Proc. 2016-55, which sets forth the effect of inflation on certain tax items in 2017, including exemption and exclusion amounts for estate, gift and generation-skipping transfer ("GST") tax. A copy of Rev. Proc. 2016-55 can be found here.

In 2017, the federal estate/gift tax exemption amount will increase by $40,000 to $5,490,000 (in 2016 this amount was $5,450,000). The generation-skipping transfer ("GST") tax exemption amount also increased to $5,490,000 (in 2016, this amount was also $5,450,000). These exemption amounts are indexed for inflation annually going forward, and therefore will presumably increase in future years. The tax on assets in excess of the exemption amounts is currently 40%.

In addition, each individual has an "annual exclusion" amount that he or she can give away to each person per year without using any of his or her gift tax exemption (certain requirements must be met for the gift to qualify for the annual exclusion). The annual exclusion amount is indexed for inflation annually. The annual exclusion amount in 2017 remains $14,000 per person (or $28,000 per person if the donor is married and the couple elects to "split" gifts), the same amount as it was for the past four years.

In 2017, the annual exclusion from tax on a gift to a spouse who is not a United States citizen increased by $1,000 to $149,000 (the 2016 exclusion amount was $148,000). Gifts to a spouse who is a United States citizen remain completely deductible for gift tax purposes.

As always, payments of tuition and medical expenses made directly to the education or health care provider do not require the use of your annual exclusion amount or your gift tax exemption.

If you are interested in learning about possible gifting opportunities, or if you want to discuss how the increased exemption amounts may impact your own estate planning, please contact your HTT&S lawyer.