Federal Estate Tax Thresholds and Rates

The 2001 Tax Act made significant changes in the maximum estate that a person can pass to her or his heirs without having to pay Federal Estate Tax. This was changed again in 2010 and in 2013. The maximum amount depends upon a number of factors. Two of the most significant factors continue to be (1) the amount of taxable gifts the person made during her or his lifetime and (2) the year in which she or he dies. If a person made no taxable gifts during her or his lifetime, the maximum tax-free estate (Federal Estate Taxes) would be the amount indicated in the Table below for a person who dies during the indicated year. The 2001, 2010 and 2013 laws also changed the maximum rate of Federal Estate Tax. The maximum rate (also called the marginal rate) for each year is also indicated in the Table. [See Note Below]

Year Maximum Tax-Free Estate Maximum Tax Rate
2001 $ 675,000 55%
2002 $1,000,000 50%
2003 $1,000,000 49%
2004 $1,500,000 48%
2005 $1,500,000 47%
2006 $2,000,000 46%
2007 $2,000,000 45%
2008 $2,000,000 45%
2009 $3,500,000 45%
2010 No Limit No Tax  **
2011 $5,000,000 35%
2012 $5,000,000 35%
2013 $5,250,000 40%

2014            $5,340,000                             40%

2015            $5,430,000                             40%

2016            $5,450,000                             40%

2017             $5,490,000                             40%

 

** Optional 2011 rates

If an estate is larger than the threshold amount indicated above, the estate will be subject to Federal Estate Tax. Under certain circumstances, a smaller estate may also be subject to that tax. The Tax Rates range from 35 percent to 55 percent, depending on the year of death and the size of the estate. For persons who die in year 2017 with an estate over the current threshold ($5,490,000), the Tax Rate is 40 percent. The threshold had previously been scheduled to decrease significantly in year 2013 and the marginal rate had been scheduled to return to 55 percent in that year but the 2013 act set a new "permanent" threshold and marginal rate. Since 2011, the picture is further complicated by "portability" - the ability of a surviving spouse to take advantage of her or his spouses unused credit amount.

Note - Warning: This Table and its contents are for informational purposes only and do not constitute legal advice. The particular circumstances may affect a person's tax obligations. You should consult an attorney in the state where you reside to determine if the Federal Estate Tax applies and if the normal tax thresholds apply to your particular situation before acting on any information contained in this Table.

Copyright 2013 - 2014 - 2015 - 2016 - 2017   Marc H. Jaffe

See other articles at this website about estate and inheritance taxes and estate planning.