1.
The exemption
from estate, gift, and generation-skipping transfer tax is permanently
set at $5 million (instead of the scheduled $1 million amount) as indexed for inflation after 2011. The 2013 inflation adjusted exemption increases to $5.25 million, up from $5.12 million in 2012. The permanent increase makes irrelevant the much discussed concern over the potential "clawback" of tax benefits associated with making a gift in an amount larger than the future estate tax exemption.
2.
The top estate and gift tax rate is permanently set at 40% (instead of the scheduled 55%), up from 35% in 2012.
3.
The flat generation-skipping transfer tax rate is permanently set at
40% (instead of the scheduled 55%), up from 35% in 2012
4.
The portability
election for a deceased spouse’s unused exemption amount is made permanent (instead of expiring).
5.
The gift and estate tax regimes are permanently
reunified.
With respect to ordinary
income (O.I.) tax rates applicable to trusts
and estates, ATRA left the 2012 rates in place except that the top 35% rate
is eliminated in favor of a top 39.6% rate.
Therefore, there isn’t an intermediate 35% trust and estate income tax
rate bracket in 2013 as there is for individuals.
2012 Rate Bracket
|
2012
|
2013 Rate Bracket
|
2013
|
$0 to $2,400
|
15%
|
$0 to $2,450
|
15%
|
$2,401 to $5,600
|
25%
|
$2,451 to $5,700
|
25%
|
$5,601 to $8,500
|
28%
|
$5,701 to $8,750
|
28%
|
$8,500 to $11,650
|
33%
|
$8,751 to $11,950
|
33%
|
$11,651 and up
|
35%
|
$11,951 and up
|
39.6%
|
With respect to long-term capital gain and qualified dividend income tax rates applicable to trusts and estates, rules similar to individuals will apply.
LTCG and Qualified
Dividend
|
2012
|
2013
|
15% O.I. rate
|
0%
|
0%
|
25% through 33% O.I. rates
|
15%
|
15%
|
39.6% O.I. rate
|
15%
|
20%
|
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