Gift and Estate Tax Exemptions Increase in 2009
Gifts that you make to other individuals above a certain amount each year may be subject to gift tax. The amount exempted from gift tax each year is linked to the inflation rate and increases periodically to the nearest $1,000. The annual gift tax exemption as of January 1, 2009 increased to $13,000 per year. This means that you may give up to $13,000 to each of any number of individuals in 2009 without paying tax on those gifts. As an example, a couple with two children may each give $13,000 to each child, for a total of $52,000 without paying any gift tax (2 people x 2 children x $13,000 each = $52,000).
A lifetime gift tax exemption may be used for gifts above the $13,000 annual amount. The lifetime gift tax exemption remains at $1 million in 2009.
The individual estate tax exemption level has been increasing since 2001. The exemption increased to $3.5 million as of January 1, 2009.
The maximum estate and gift tax rates remain at 45% in 2009.
See Federal Gift and Estate Tax Exemption Levels chart.