Estate Taxes: Changes Likely as Congress Drafts Plans
Back in January, when we posted about possible tax law changes under the Trump administration, we anticipated modifications to inheritance and gift tax laws. Now, with the House having finalized a tax bill and the Senate working on its own version, we’re able to take a closer look at proposals coming out of Congress.
What can we make of plans coming out of the House and Senate?
Neither plan eliminates the estate tax at this time. The House bill that was passed on November 15 would roll out some changes leading to the elimination of the estate tax and the generation skipping transfer (GST) tax by January 1, 2024. From what we know at this time, the Senate bill will keep both taxes in place, albeit with some changes to reduce the number of families affected.
Both plans effectively double the exclusion amount — the threshold at which families have to pay estate taxes — from the current base of $5 million per person or $10 million per couple to $10 million per person or $20 million per couple. (Base amounts are adjusted for inflation, making the actual thresholds somewhat higher.)
When will we know more?
The Senate’s bill was approved by the Senate Finance Committee on November 16. Debate by the entire Senate is expected to resume after the Thanksgiving break, and Southard Financial will carefully follow the proceedings. If the White House and GOP-led Congress have their way, President Trump could sign a final bill into law before the end of 2017.
What does this mean for you right now?
Most proposed changes would not apply until 2018 and won’t have any effect on 2017 tax filings. It would be wise, however, to speak with your tax advisor about how proposed changes could impact your federal (and state) income taxes. There may be decisions you need to make before the end of 2017 to take advantage of currently available deductions or exemptions. For wealthy individuals and families, of course, estate planning continues to be of paramount importance.
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To find out more about business valuation in the changing tax environment, or to discuss your specific appraisal needs, call Southard Financial at (901) 761-7500, use the form on our contact page, or reach out to us on social media.