Wealth Transfer Planning By the Numbers: The Unofficial 2017 Exclusions and Brackets


Wealth Transfer Planning By the Numbers: The Unofficial 2017 Exclusions and Brackets

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Thomas W. Abendroth

Many tax threshold amounts and tax brackets are inflation-adjusted. The official inflation adjustments for 2017 will not be released by the Treasury Department until late 2016, but the expected adjustments have been calculated for certain important wealth transfer numbers. These unofficial calculations are based on Consumer Price Index (CPI) for the 12 months ending August 31, which is the measuring period used by the U.S. Treasury. It is expected that the estate and gift tax applicable exclusion will be $5,490,000 in 2017, up from $5,450,000. This also will be the adjusted number for the GST exemption. The preliminary calculation is that the $14,000 annual exclusion will remain the same.

The increments for inflation adjustment vary significantly. For example, the applicable exclusion for estate and gift tax purposes is adjusted in $10,000 increments from its original base of $5,000,000. That means changes of more than 0.2 percent in the CPI result in a change in the exclusion amount. Meanwhile, the annual exclusion is adjusted in $1,000 increments from an original base of $10,000. As a result, in recent history, it takes several years for the cumulative change in the CPI to result in an adjustment to the annual exclusion amount.


The most relevant projected 2017 figures are listed below:

Applicable exclusion amount: $5,490,000
GST exemption: $5,490,000
Annual exclusion: $14,000
Annual exclusion for gifts to noncitizen spouse: $149,000
Kiddie tax exemption: $2,100


Income Tax Brackets for Estates and Trusts:

Not over $2,550: 15%
$2,550 to $6,000: 25%
$6,001 to $9,150: 28%
$9,151 to $12,500: 33%
Over $12,500: 39.6%


We assist many of our clients in optimizing the use of their exclusions and exemptions. The additional applicable exclusion and GST exemption will provide a new opportunity for gift planning.