2006 Tax Law Changes - Estate and Gift Taxes

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Estate Tax Applicable Exclusion Amount Increased

An estate tax return for a U.S. citizen or resident needs to be filed only if the gross estate exceeds the applicable exclusion amount for the year of death, which has increased as shown below.

  • Exclusion Amount
    • 2006, 2007, and 2008: $2,000,000
    • 2009: $3,500,000

Annual Exclusion for Gifts Increased

The annual exclusion for gifts of present interests made to a donee during the calendar year has increased to $12,000.

The annual exclusion for gifts made to spouses who are not U.S. citizens has increased to $120,000.

Maximum Estate and Gift Tax Rate Reduced

For estates of decedents dying, and gifts made, after 2005, the maximum rate for the estate tax and the gift tax is as follows.

  • Maximum Rate
    • 2006: 46%
    • 2007, 2008, and 2009: 45%

Generation-Skipping Transfer (GST) Exemption Increased

The generation-skipping transfer (GST) lifetime exemption has increased to $2,000,000. The annual increase can only be allocated to transfers made during or after the year of the increase.

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