While all eyes were on the election, the Internal Revenue Service announced the official estate and gift tax exemptions for 2021. The annual gift exclusion will remain the same, allowing individuals to give $15,000 to as many individuals as desired, each year.

The federal estate tax exemption will increase from 2020’s $11.58 million to reach another record high at $11.7 million per person for 2021. This means an individual could shield $11.7 million from federal estate or gift taxes, and a married couple could safeguard $23.4 million with proper planning.

While the IRS’s 2021 federal estate and gift tax exemption announcement was official, the exemption amount is far from certain. In 2026, the exemption is scheduled to revert to $5 million indexed for inflation. However, President Elect Joe Biden proposed reducing it even further to $3.5 million per person.

With uncertainty still looming around Democratic or Republican control of the Senate, it is unlikely we will have clarity on the future of the federal estate and gift tax exemptions before year end. Luckily, the IRS finalized rules last year stating previous lifetime gifts would be excluded if the exemption is lowered. Therefore, now is an ideal time to review your estate planning and gifting options. The attorneys at Buckley Fine are here to discuss what the election means to you and your family.