Historical Look at Estate and Gift Tax Rates

2019 Whole Ball Of Tax

MAXIMUM ESTATE TAX RATES (1916–2019)

In effect from September 9, 1916, to March 2, 1917 10% of net estate in excess of $5 million
In effect from March 3, 1917, to October 3, 1917 15% of net estate in excess of $5 million
In effect from October 4, 1917, to 6:55 p.m. EST, February 24, 1919 Basic estate tax of 15% of net estate in excess of $5 million plus war estate tax of 10% of net estate tax in excess of $10 million
In effect after 6:55 p.m. EST, February 24, 1919, to 10:25 a.m. EST, February 26, 1926 25% of net estate in excess of $10 million
In effect after 10:25 a.m. EST, February 26, 1926, to 5 p.m. EST, June 6, 1932 20% of net estate in excess of $50 million1
In effect after 5 p.m. EST, June 6, 1932, to May 10, 1934 45% of net estate in excess of $50 million1
In effect from May 11, 1934, to August 30, 1935 60% of net estate in excess of $50 million1
In effect from August 31, 1935, to June 25, 1940 70% of net estate in excess of $50 million1
Estates of decedents dying after June 25, 1940, but before September 21, 1941 70% of excess of net estate over $10 million1 plus a defense tax of 10% of the total tax computed under the basic and additional estate taxes (in effect, maximum tax was 77%)
Estates of decedents dying after September 20, 1941, but before August 17, 1954 77% of excess of net estate over $10 million1
Estates of decedents dying after August 16, 1954, but before 1977 77% of excess over $10 million
Estates of decedents dying after 1976 but before 1982 70% of excess over $5 million
Estates of decedents dying in 1982 65% of excess over $4 million
Estates of decedents dying in 1983 60% of excess over $3.5 million
Estates of decedents dying after 1983 and before 1988 55% of excess over $3 million
Estates of decedents dying after 1987 and before 1998 55% of excess over $3 million (effectively 60% for estates in excess of $10 million but less than $21,040,000 because of a surtax to phase out benefits of the graduated rates and unified credit)
Estates of decedents dying in 1998 through 2001 55% of excess over $3 million (effectively 60% for estates in excess of $10 million but less than $17,184,000 because of surtax to phase out benefits of only the graduated rates)
Estates of decedents dying in 2002 50% of excess over $ 2.5 million2
Estates of decedents dying in 2003 49% of excess over $2 million
Estates of decedents dying in 2004 48% of excess over $2 million
Estates of decedents dying in 2005 47% of excess over $2 million
Estates of decedents dying in 2006 46% of excess over $2 million
Estates of decedents dying in 2007 and 2008 45% of excess over $2 million3
Estates of decedents dying in 2009 45% of excess over $3.5 million
Estates of decedents dying in 2010 35% of excess over $5 million and stepped-up basis for inherited assets, or election for no estate tax, but carryover basis for inherited assets4
Estates of decedents dying in 2011 35% of excess over $5 million5
Estates of decedents dying in 2012 35% of excess over $5,120,000 (as adjusted for inflation)5
Estates of decedents dying in 2013 40% of excess over $5,250,000 (as adjusted for inflation)6
Estates of decedents dying in 2014 40% of excess over $5,340,000 (as adjusted for inflation)6
Estates of decedents dying in 2015 40% of excess over $5,430,000 (as adjusted for inflation)6
Estates of decedents dying in 2016 40% of excess over $5,450,000 (as adjusted for inflation)6
Estates of decedents dying in 2017 40% of excess over $5,490,000 (as adjusted for inflation)6
Estates of decedents dying in 2018 40% of excess over $11,180,000 (to be adjusted for inflation using Chained CPI)7
Estates of decedents dying in 2019 40% of excess over $11,400,000 (as adjusted for inflation using Chained CPI)7

For Estate Taxes:

1 Estate tax was composed of a basic estate tax plus an additional estate tax; in effect, estates never paid more than the amount of the additional estate tax.

2 Beginning in 2002, the surtax on estates in excess of $10 million is repealed. In addition, the maximum estate tax rate began to decrease, while the applicable exclusion amount for estate tax purposes (i.e., the lifetime amount shielded from estate tax) began to increase. During the years 2002 through 2009, the estate tax applicable exclusion amount was $1 million in 2002 and 2003, $1.5 million in 2004 and 2005, $2 million in 2006 through 2008, and $3.5 million in 2009.

3 Although the estate tax rate schedule for 2007 through 2009 (Code Sec. 2001) shows the 45% rate being imposed on estates in excess of $1.5 million, the estate tax applicable exclusion amount effectively precludes taxation of any transfers in an amount below $2 million in 2006 through 2008 and $3.5 million in 2009.

4 The Tax Relief, Unemployment Reauthorization and Job Creation Act of 2010, reinstated the estate tax effective for decedents dying after December 31, 2009. However, the Tax Relief Act of 2010 also provided an election for the estates of decedents dying in 2010 to use the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) rules of no estate tax, but a carryover basis for inherited assets. Accordingly, few estates of decedents dying in 2010 will actually be subject to the estate tax. In addition, although the estate tax rate schedule for 2010 through 2012 (Code Sec. 2001) shows the 35% rate being imposed on estates in excess of $500,000, the estate tax applicable exclusion amount effectively precludes taxation of any transfers in an amount below $5 million in 2010 and 2011, and $5,120,000 in 2012.

5 Beginning in 2011, the Tax Relief Act of 2010 allows a surviving spouse to utilize the unused portion of the applicable exclusion amount (as otherwise increased under the Act) of his or her last predeceased spouse. An election by the predeceased spouse’s estate is required.

6 The Tax Relief Act of 2010 reinstated the estate tax at a lower rate and a higher exclusion amount than would have been the case if the sunset called for under EGTRRA had occurred. However, the Tax Relief Act of 2010 was only to apply to estates through 2012. It was scheduled to sunset in 2013, leaving the law as if EGTRRA and the Tax Relief Act of 2010 had never been passed. The American Taxpayer Relief Act of 2012 struck the sunset provisions of EGTRRA and the 2010 Tax Relief Act, thus making the changes enacted by those laws permanent. The 2012 American Taxpayer Relief Act also raised the maximum estate tax rate to 40%. Although the estate tax rate schedule for 2013 and beyond (Code Sec. 2001) shows the 40% rate being imposed on estates in excess of $1,000,000, the applicable exclusion amount effectively precludes taxation of any transfers in an amount below $5,490,000 in 2017 (it was $5,450,000 in 2016, $5,430,000 in 2015, $5,340,000 in 2014, and $5,250,000 in 2013).

7 The Tax Cuts and Jobs Act of 2017 (P.L. 115-97) doubled the basic exclusion amount to $10,000,000, as adjusted for inflation. It also altered the methodology for computing inflation adjustment amounts in the Internal Revenue Code to use the Chained Consumer Price Index for All Urban Consumers (C-CPI-U).

MAXIMUM GIFT TAX RATES (1924–2019)

1924–1925 40% on transfers in excess of $10 million over the course of the donor’s lifetime
1926–June 6, 1932 No gift tax imposed (repealed by the Revenue Act of 1926)
June 7, 1932–1934 33.5% on transfers in excess of $10 million over the course of the donor’s lifetime
1935 45% on transfers in excess of $10 million over the course of the donor’s lifetime
1936–1940 52.5% on transfers in excess of $50 million over the course of the donor’s lifetime
1941 52.5% on transfers in excess of $50 million over the course of the donor’s lifetime, plus a defense tax of 10% of the total tax computed (in effect, maximum tax was 57.75%)
1942–1976 57.75% on transfers in excess of $10 million over the course of the donor’s lifetime
1977–1981 70% of transfers in excess of $5 million over the course of the donor’s lifetime
1982 65% of transfers in excess of $4 million over the course of the donor’s lifetime
1983 60% of transfers in excess of $3.5 million over the course of the donor’s lifetime
1984–1987 55% of transfers in excess of $3 million over the course of the donor’s lifetime
1988–1997 55% of transfers in excess of $3 million over the course of the donor’s lifetime (effectively 60% for transfers in excess of $10 million but less than $21,040,000 because of a surtax to phase out the benefits of the graduated rates and unified credit)
1998–2001 55% of transfers in excess of $3 million over the course of the donor’s lifetime (effectively 60% for transfers in excess of $10 million but less than $17,184,000, because of a surtax to phase out the benefits of only the graduated rates)
2002 50% of transfers in excess of $2.5 million over the course of the donor’s lifetime
2003 49% of transfers in excess of $2 million over the course of the donor’s lifetime
2004 48% of transfers in excess of $2 million over the course of the donor’s lifetime1
2005 47% of transfers in excess of $2 million over the course of the donor’s lifetime
2006 46% of transfers in excess of $2 million over the course of the donor’s lifetime
2007–2009 45% of transfers in excess of $1.5 million over the course of the donor’s lifetime
2010 35% of transfers in excess of $1 million over the course of the donor’s lifetime2
2011 35% of transfers in excess of $5 million over the course of the donor’s lifetime3
2012 35% of transfers in excess of $5,120,000 (as adjusted for inflation) over the course of the donor’s lifetime3
2013 40% of transfers in excess of $5,250,000 (as adjusted for inflation) over the course of the donor’s lifetime4
2014 40% of transfers in excess of $5,340,000 (as adjusted for inflation) over the course of the donor’s lifetime4
2015 40% of transfers in excess of $5,430,000 (as adjusted for inflation) over the course of the donor’s lifetime4
2016 40% of transfers in excess of $5,450,000 (as adjusted for inflation) over the course of the donor's lifetime4
2017 40% of transfers in excess of $5,490,000 (as adjusted for inflation) over the course of the donor's lifetime4
2018 40% of transfers in excess of over $11,180,000 (as adjusted for inflation using Chained CPI)5
2019 40% of transfers in excess of $11,400,000 (as adjusted for inflation using Chained CPI)5

For Gift Taxes:

1 Beginning in 2004, the applicable exclusion amount for gift tax purposes (i.e., the lifetime amount shielded from gift tax) differed from the amount used for estate tax purposes. During the years 2002 through 2010, the gift tax applicable exclusion amount remained constant at $1 million, while the estate tax applicable exclusion amount was $1 million in 2002 and 2003, $1.5 million in 2004 and 2005, $2 million in 2006 through 2008 and $3.5 million in 2009.

2 Although the gift tax rate schedule for the years 2010 through 2012 (Code Sec. 2502) shows the 35% rate being imposed on transfers in excess of $500,000, the gift tax applicable exclusion amount effectively precludes taxation of any transfers in an amount below $1 million in 2010, $5 million in 2011 and $5,120,000 in 2012.

3 Beginning in 2011, the Tax Relief Act of 2010 allows a surviving spouse to utilize the unused portion of the applicable exclusion amount (as otherwise increased under the Act) of his or her last predeceased spouse. An election by the predeceased spouse's estate is required.

4 The Tax Relief Act of 2010 lowered the top tax rate and increased the exclusion amount to $5 million compared to what would have been the case if the transfer tax provisions of EGTRRA had been allowed to sunset as planned. However, the Tax Relief Act of 2010 was only to apply to gift taxes through 2012. It was scheduled to sunset in 2013, leaving the law as if EGTRRA and the Tax Relief Act of 2010 had never been passed. The American Taxpayer Relief Act of 2012 struck the sunset provisions of EGTRRA and the 2010 Tax Relief Act, thus making the changes enacted by those laws permanent. The 2012 Taxpayer Relief Act also raised the maximum gift tax rate to 40%. Although the gift tax rate schedule for 2013 and beyond (Code Sec. 2502 by reference to Code Sec. 2001) shows the 40% rate being imposed on gifts in excess of $1,000,000, the applicable exclusion amount effectively precludes taxation of any transfers in an amount below $5,490,000 in 2017, (it was $5,450,000 in 2016, $5,430,000 in 2015, $5,340,000 in 2014, and $5,250,000 in 2013).

5 The Tax Cuts and Jobs Act of 2017 (P.L. 115-97) doubled the basic exclusion amount to $10,000,000, as adjusted for inflation. It also altered the methodology for computing inflation adjustment amounts in the Internal Revenue Code to use the Chained Consumer Price Index for All Urban Consumers (C-CPI-U).

SOURCE: Wolters Kluwer, 2019
Permission for use granted.


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