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Now that the new year has arrived, it is a good time to catch up on the latest tax rates for estate and trust income tax brackets and exemption amounts for estate, gift and generation-skipping transfer (GST) taxes in 2021. The Internal Revenue Service adjusts these figures annually for cost-of-living increases.
Below is a summary of the 2021 figures. The original news release from the IRS may be found here.
2021 Gift, GST and Trusts & Estates Income Tax Rates
Gift tax: The lifetime gift tax exemption for gifts made during 2021 is $11.7 million (increased from $11.58 million in 2020). The top marginal rate remains 40 percent. The gift tax annual exclusion amount remains $15,000. The annual exclusion for gifts made to noncitizen spouses in 2021 is $159,000 (increased from $157,000 in 2020).
GST tax: The GST tax exemption amount, which can be applied to generation-skipping transfers (including those in trust) during 2021, is $11.7 million (increased from $11.58 million in 2020). The rate remains 40 percent.
Income tax: The tax rate schedule for estates and trusts in 2021 is as follows:
| If taxable income is: | The tax is: |
| Not over $2,650 | 10 percent of taxable income |
| Over $2,650 but not over $9,550 | $265 plus 24 percent of the excess over $2,650 |
| Over $9,550 but not over $13,050 | $1,921 plus 35 percent of the excess over $9,550 |
| Over $13,050 | $3,146 plus 37 percent of the excess over $13,050 |