Wolters Kluwer came out with their annual inflation adjustment projections which reflect several increased thresholds and ceilings you should be aware of. The IRS is expected to release the official amount later this year.
Of particular note:
1) The trust and estate maximum income tax bracket (37%) is reached at $12,750, up from $12,500.
2) The federal estate and gift tax exemptions amounts increase to $11.4 million, up from $11.18 million.
Income tax brackets
For estates and trusts:
- taxable incomes up to $2,600: the 10% bracket applies
- taxable incomes over $2,600 and up to $9,300: the 24% bracket applies
- taxable incomes over $9,300 and up to $12,750: the 35% bracket applies
- taxable incomes over $12,750: 37% bracket applies
Estate and Gift Tax
The following amounts related to transfer taxes are projected for 2019:
- The gift tax annual exemption will be $15,000 in 2019.
- The estate and gift tax applicable exclusion will be $11,400,000 for decedents dying in 2019, up from $11,180,000 for 2018.
- The exclusion for gifts made in 2019 to a spouse who is not a U.S. citizen will be $155,000 for 2019.
- For 2019, the allowed Roth IRA contribution amount is projected to phase out for married taxpayers filing jointly with income between $193,000 and $203,000. For heads of household and unmarried filers, the projected phase out range is between $122,000 to $137,000.
- The maximum amount of deductible contributions that can be made to an IRA is $6,000 for 2019. The increased contribution amount for taxpayers age 50 and over will, therefore, be $7,000.
- The above-the-line deduction for traditional IRA contributions is projected to begin to phase out for married joint filers whose income is greater than $103,000 if both spouses are covered by a retirement plan at work. If only one spouse is covered by a retirement plan at work, the phase out is projected to begin when modified adjusted gross income reaches $193,000. For heads of household and unmarried filers who are covered by a retirement plan at work, the 2019 income phase out range for deductible IRA contributions is projected to begin at $64,000.
Give us a call if you need help reducing your estate taxes.