A new report by the Congressional Budget Office provides a guide to understanding federal estate and gift taxes. These taxes affect only a small number of taxpayers (of 2.7 million Americans who died in 2016 only 5,500 left taxable estates, and in 2018 only 2,000 people paid gift taxes), but they may consider in planning for financial professionals working with affluent families or business owners. In 2021, estate values above an $11.7 million exemption are taxed at a 40% rate. “The same threshold and tax rate apply to gift taxes,” the report says.

The report describes the taxes as well as the people who pay them and the types of assets that make up taxable estates (primarily financial and real estate assets). It looks at the potential impact of the estate tax on saving and investing and also outlines scheduled changes to estate and gift taxes under existing law.

For information on new tax proposals that could impact financial planning, watch the on-demand NAIFA Advocacy webinar, “Tax Trends: Eight New Proposals Advisors Shouldn’t Ignore,” featuring NAIFA AVP of Government Relations Judi Carsrud and NAIFA Policy Director Maeghan Gale.