Federal Estate Tax
- 2018 Exemption Equivalent: $11, 220,000.00* (up from $5,490.000 in 2017)
- Annual Inflation Indexing: Yes (rounded annually to the nearest $10,000)
- Portability of unused exemption to surviving spouse: Yes (by timely election on Form 706 Estate Tax Return of deceased spouse)
- Rate: 40% (flat rate on taxable estate above exemption)
Federal Gift Tax (unified)
- Lifetime Gift Tax Exemption: $11, 220,000.00* (total lifetime taxable gifts)
- Annual Gift Tax Exclusion: $15,000 (up from $14,000 in 2017; increased by inflation indexing in $1,000 increments)
- Rate: 40% (flat rate on taxable estate above exemption)
Federal Generation-Skipping Transfer (GST) Tax (unified)
- GST Exemption: $11, 220,000.00* (minus lifetime GST exemption used)
- Annual Inflation Indexing: Yes (rounded annually to the nearest $10,000)
- Portability of unused GST exemption to spouse: No
- Rate: 40% (flat rate on GST transfers above exemption)
Illinois Estate Tax
- Estate Tax Exemption: remains at $4000,000.00 for 2018 (not scheduled to rise)
- Inflation Indexing: No
- Gift Tax: Non
- Portability of unused exemption to spouse: No
- Rate: Varies (effective rate up to around 28.5%)
Federal Trust and Estate Fiduciary Income Tax
- Tax Brackets: 10% up to $2,550; 24% between $2,550 and $9,150; 35% between $9,150 and $12,500; 37% over $12,500
- Marginal Rate: 37% top rate applies to trust-retained income over $12,500
- Medicare Surcharge: Top rate is subject to 3.8% Medicare surcharge tax on net investment income
- Pass Through: Income generally passed through to beneficiaries via K-1 to the extent of distributions
* These changes in the “Tax Cuts and Jobs Act” are due to “sunset” on January 1, 2026. Estate Gift and GST exemption will revert back to $5 million plus inflation indexing back to 2011. Absent future changes, this will result in an exemption of approximately $6.2 million in 2026.
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