IRS Announces 2021 Adjustments to Several Trust, Estate Items in Revenue Procedure 2020-45
The Internal Revenue Service recently released Revenue Procedure 2020-45 which applies to taxable years beginning in 2021. This announced the annual inflation adjustments for more than 60 tax provisions. A few of the major items related to trusts and estates include the following:
- The basic exclusion amount (which includes the gift and generation-skipping transfer tax exemption) for estates of decedents who pass away during 2021 is $11,700,000.00, which is an increase from the 2020 figure of $11,580,000.00.
- The annual exclusion for gifts is $15,000.00 for calendar year 2021, which remains unchanged from 2020.
- The annual gift tax exclusion for a non-citizen spouse is $159,000.00, which is an increase from the 2020 figure of $157,000.00.
- The top income tax bracket for estates and trusts will begin at $13,051.00, which is an increase from the 2020 figure of $12,950.00. This tax bracket is taxed at a rate of 37%.
- The alternative minimum tax exemption for estates and trusts will be $25,700.00, and the phaseout of the exemption will start at $86,650.00.