{"id":5406,"date":"2018-01-02T01:39:17","date_gmt":"2018-01-02T07:39:17","guid":{"rendered":"https:\/\/agrilife.org\/texasaglaw\/?p=5406"},"modified":"2026-04-17T15:24:27","modified_gmt":"2026-04-17T20:24:27","slug":"2018-estate-tax-changes","status":"publish","type":"post","link":"https:\/\/agrilife.org\/texasaglaw\/2018\/01\/02\/2018-estate-tax-changes\/","title":{"rendered":"2018 Estate Tax Changes"},"content":{"rendered":"

With the start of a new year and the passage of the “Tax Cuts and Jobs Act,” there are important changes to the federal estate tax.\u00a0 Everyone should take time to understand the current and any new estate tax law and to evaluate his or her estate to determine if estate tax liability may be an issue.<\/p>\n

\"\"

Photo by Sveta Fedarava on Unsplash<\/p><\/div>\n

Federal Estate Tax Basics<\/strong><\/p>\n

The federal estate tax is essentially a tax on a person\u2019s right to transfer property at death.\u00a0 If a person\u2019s taxable estate is valued over the exemption amount set by Congress, the person\u2019s estate is required to pay taxes on that amount within 9 months of death.\u00a0 The exemption is based upon the value of a person\u2019s \u201ctaxable estate,\u201d which is essentially the market value of their assets less certain allowable expenses and deductions such as mortgages, funeral expenses, and estate administration costs.<\/p>\n

As recently as the early 2000\u2019s, the estate tax exemption was as low as $1 million per person.\u00a0 Certainly, given the value of agricultural land and farm assets, this had the potential to impact a large number of agricultural producers.\u00a0 In 2013, the exemption level was raised significantly to $5 million per individual, which would then be increased for inflation in following years.\u00a0 Studies show this is greatly decreased the number of persons facing estate tax liability.\u00a0 According to one estate tax lawyer, in 2016, only 682 taxable estates contained any farm assets at all.<\/p>\n

There are a number of estate planning tools available to help someone avoid estate tax liability even if his or her gross estate may be worth more than the exemption amount.<\/p>\n

2018 Exemptions<\/strong><\/p>\n

For persons dying in 2017, the federal estate tax exemption was $5.49 million per person.\u00a0 Due to changes in the tax reform bill, for persons dying between 2018-2025,\u00a0 the exemption will be $11.2 million.\u00a0 This means that in 2018, a couple may transfer $22.4 million without facing any estate tax liability.\u00a0 For persons with estates valued at more than the exemption, a 40% tax is imposed on the amount above the exemption level.<\/p>\n

For example, let\u2019s calculate the estate tax liability for a person with a taxable estate worth $11 million in 2017 and in 2018.\u00a0 If the person died in 2017, the exemption was $5.49 million, meaning that the person’s estate is $5,510,000 over that amount. \u00a0At a 40% tax rate, his tax liability would be $2,204,000.\u00a0 In 2018, however, his estate value would fall below the $11.2 million threshold and he would owe no federal estate tax.<\/p>\n

Take note that the “Tax Cuts and Jobs Act” did not repeal the federal estate tax, and it did not make the $11.2 million\/person exemption permanent.\u00a0 In 2026, the exemption level will revert back to the $5 million level, adjusted for inflation.<\/p>\n

Takeaways<\/strong><\/p>\n

It has been said that the only certainties in life are death and taxes.\u00a0 In light of this, everyone should be aware of the current law regarding the federal estate tax.\u00a0 For most people, particularly given the increase in the exemption recently passed by Congress, estate taxes are likely not an issue.\u00a0 However, for persons with estates that may be close to the exemption amount, it is critical to talk with an attorney and accountant to determine what steps may be available to help minimize the estate tax liability at death.<\/p>\n","protected":false},"excerpt":{"rendered":"

With the start of a new year and the passage of the “Tax Cuts and Jobs Act,” there are important changes to the federal estate tax.\u00a0 Everyone should take time to understand the current and any new estate tax law and to evaluate his or her estate to determine if estate tax liability may be an issue. Federal Estate Tax Basics The federal estate tax is essentially a tax on a person\u2019s right to transfer property at death.\u00a0 If a person\u2019s taxable estate is valued over the exemption… Read More →<\/a><\/span><\/p>\n","protected":false},"author":2444,"featured_media":5407,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[17],"tags":[],"class_list":["post-5406","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-estate-planning"],"acf":[],"yoast_head":"\n2018 Estate Tax Changes - Texas Agriculture Law<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/agrilife.org\/texasaglaw\/2018\/01\/02\/2018-estate-tax-changes\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"2018 Estate Tax Changes - Texas Agriculture Law\" \/>\n<meta property=\"og:description\" content=\"With the start of a new year and the passage of the “Tax Cuts and Jobs Act,” there are important changes to the federal estate tax.\u00a0 Everyone should take time to understand the current and any new estate tax law and to evaluate his or her estate to determine if estate tax liability may be an issue. 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