Changes to Estate Tax Exemption Amounts

January 2016

Below is a summary of the Minnesota estate tax exemption and federal estate and gift exemption amounts for 2016. Please let us know if you have questions regarding the status of the laws.

Minnesota Estate Tax Exemption
As of January 1, 2016, the Minnesota estate tax exemption amount has increased to $1.6 million, up from $1.4 million in 2015. This state estate tax exemption will increase to $1.8 million in 2017 and then $2 million in 2018. The Minnesota estate tax rate ranges from 10-16% for deaths occurring in 2016. Minnesota is one of only 15 states that has a state estate tax.

Federal Estate Tax Exemption
The 2016 federal estate tax exemption amount is $5.45 million, up from $5.43 million in 2015. This means that utilizing both exemptions, a married couple can pass $10.9 million to their beneficiaries without paying any federal estate tax. The federal estate tax rate is currently 40%.

This federal exemption amount of $5.45 million is quite high, and we at FMJ anticipate that sometime in the next few years, the exemption amount will decrease.

Annual Exclusion for Gifts
The annual exclusion amount for gifts has stayed at $14,000. This means that individuals can gift up to $14,000 to any person without incurring a gift tax or having to make any required filing.  For married couples, this means that they could gift $28,000 to each child without having to file any gift tax return.

Please give either David Ness or Matt Jensen a call at 952.995.9500, if you have any questions or would like to discuss.