2014 IRS Inflation Adjustments

The Internal Revenue Service has released inflation-adjusted amounts for 2014 of interest to estate planners include the following:

  1. The applicable exclusion amount, which is also applicable to lifetime gifts, is increased from $5,250,000 to $5,340,000 for 2014 gifts and estates of decedent’s dying in 2014.
  2. The trust and estate income tax rates have been raised with a top 39.6% tax rate now kicking in at a total of $12,150.
  3. This same threshold applies to the new Medicare tax on undistributed net investment income of a trust or estate.
  4. The “kiddie” tax (the portion of the income of a child under age 19 or age 24 in the case of a dependent student) that is exempt from the kiddie tax remains at $1,000.
  5. The gift tax annual exclusion remains at $14,000.

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