The Biden administration’s Tax Cuts and Jobs Act (TCJA) made changes to individual income taxes. TCJA has temporarily doubled the estate, gift and generation-skipping transfer (GST) tax exemptions. This increase in tax exemptions will sunset (expire) after December 31, 2025, and go back to pre-TCJA levels. Under Illinois state law, Illinois estate tax exemption amounts will not increase under TCJA.
Annual Gift Tax Exemptions
The 2021 federal estate, gift and GST tax exemption amounts are $11.7 million. The maximum rate for federal estate, gift and GST taxes is 40%. In 2022, the federal estate, gift and GST (generation-skipping transfer trusts) applicable exclusion amounts will increase to $12.06 million, and the maximum rate for federal estate, gift and GST taxes will remain 40%.
Annual Gift Tax Exemption
The 2021 Annual Exclusion Amount is $15,000 per person and $30,000 for a married couple. In 2022, the annual exclusion for gifts will increase to $16,000 and $32,000 for married couples.
The exemption on tax-free annual gifts made to noncitizen spouses will increase from $159,000 in 2021 to $164,000 in 2022.
Federal Estate Tax Exemptions
The federal estate tax exemption amount increased under the Tax Cuts and Jobs Act. The base federal gift, estate and GST tax exemptions doubled from $5 million per person to $10 million per person, ending December 31.2025.
Illinois Estate Tax Exemptions
Federal estate tax emotions are increasing under TCJA, but Illinois estate tax exemptions will not increase under state law. Illinois is one of 12 states that impose a state estate tax in addition to the federal estate tax, often called a death tax.
The Illinois estate tax gradually increases up to 16% – but is only applied on estates valued at more than $4 million. An experienced estate planning attorney can advise you on Illinois estate tax emotions based on the value of your estate, and how to minimize the taxes on your estate, and protect the financial future of your loved ones.
Do you have questions about Illinois estate taxes and protecting your loved ones after you are gone? Our experienced estate planning attorneys in Cook, DuPage, Kane, Lake, and Will counties Illinois can advise you on the best options to protect your assets and loved ones. To talk to an estate planning attorney contact the Estate & Probate Legal Group at 630-864-5835.