13 Mar Gift Tax Law Changes Proposed by President
Under current law, a donor may give $14,000 per year, per person, without having to report such gift to the IRS or be subject to gift taxes. Furthermore in Texas (which follows the federal law), a donor can give an amount in excess of $14,000 to a donee and simply file a federal gift tax return with no gift tax due if the total amount gifted is less than the lifetime estate or gift exclusionary amount which is presently $5,432,000. President Obama’s fiscal year 2016 Budget released two weeks ago would impose an annual gift limit of $50,000 (indexed with inflation) – not the present per year, per donee exclusion. So, if the donor gives more than $50,000 in a year, then the donor would be subjected to gift taxes. Furthermore, the lifetime gift tax exemption would be reduced to $1 million (instead of the present $5,432,000) and the estate tax and generation skipping transfer tax exemption (also presently $5,432,000) would be reduced to $3.5 million with no indexing for inflation. The top tax rate would be 45%.
