The estate, gift and generation-skipping transfer (GST) tax exclusions and rates would revert back to 2009 rules.
The Obama Administration proposes to restore the 2009 estate, gift and GST transfer tax exclusions and rates beginning in 2018. Under this proposal, the estate and GST tax exemption amounts would be reduced to $3.5 million, while the gift tax exemption would be reduced to $1 million. There would no longer be any indexing of these exemption amounts for inflation. The top tax rate would be increased to 45 percent from the current top rate of 40 percent. Portability would, however, continue in effect.
The Administration’s proposal clarifies that there would be no clawback for prior transfers by reason of the reduction in the estate, gift and GST tax exemption amounts. Accordingly, if this proposal were enacted into law, it would most likely prompt another rush of gifting for wealthy individuals in late 2017 similar to the recent gifting rush at the end of 2012.