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2016 Federal and State Estate Gift Tax Exemptions for D.C., Maryland, and Virginia

December 28, 2015

Each year, certain estate, gift and generation-skipping transfer tax figures are subject to inflation adjustments.  This client alert addresses inflation adjustments and other changes in federal and state estate and gift tax exemptions, that  take effect January 1, 2016, for D.C., Maryland, and Virginia residents.  Residents in these jurisdictions should seek qualified counsel if they face the situations discussed below.

Indexing of the federal unified estate and gift tax exemption will cause it to rise from $5,430,000 in 2015 to $5,450,000 for decedents dying in 2016. The generation-skipping transfer tax exemption will also increase to $5,450,000 for 2016.

Under legislation passed in 2014 (see our 2014 client alert "Maryland Estate Tax Exemption to Rise"), the Maryland estate tax exemption  will rise to $2,000,000 effective for decedents dying on or after January 1, 2016.  Scheduled increases in the D.C. estate tax exemption were subject to attaining certain budget targets that  have not yet been met, so the D.C. estate tax exemption will remain at $1,000,000 for 2016.  Virginia repealed its estate tax in 2007.  Neither D.C., Maryland nor Virginia has a state gift tax.

The federal annual exclusion from gift tax will remain at $14,000 for 2016. 

Although the D.C. estate tax exemption will not increase for decedents dying in 2016, one important change to the D.C. estate tax will take effect.  Under prior law, the first $1,000,000 of assets was exempt from D.C. estate tax only if the taxable estate was $1,000,000 or less.  A legislative change to the language of the exemption effective January 1, 2016, creates a "zero bracket amount" of $1,000,000.  This has the effect of exempting from D.C. estate tax the first $1,000,000 of assets, even if the taxable estate exceeds $1,000,000.  When and if the budget targets are met in future years, this zero bracket amount will increase first to $2 million and then to match the federal exemption amount, including indexing. 

For more information, please contact:

Beth Shapiro Kaufman
bkaufman@capdale.com
202.862.5062 

Anne J. O'Brien 
aobrien@capdale.com
202.862.5033

  Megan E. Wernke
mwernke@capdale.com
     202.862.5088  

 William D. Fournier
wfournier@capdale.com
202.862.5079

________________________________________________

 

About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of tax, tax controversy, and litigation legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills - combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment - make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:

- Bankruptcy
- Complex Litigation
Corporate Law
-
Corporate, Business & Transactional Tax
-
Creditors' Rights
- Employee Benefits
- Exempt Organizations

- International Tax
- Political Law
- Private Client
- Tax Controversies
- Tax Litigation
- White Collar Defense

For more information, please visit us at www.caplindrysdale.com.

Washington, DC Office: 
One Thomas Circle, NW
Suite 1100
Washington, DC 20005
202.862.5000

       

New York, NY Office:
600 Lexington Avenue
21
st Floor 
New York, NY 10022
212.379.6000

___________________________

Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.

© 2015 Caplin & Drysdale, Chartered
All Rights Reserved.


________________________________________________

About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of tax, tax controversy, and litigation legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills - combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment - make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:

-Bankruptcy
-Business, Investment & Transactional Tax
-Complex Litigation
-Corporate Law
-Employee Benefits
-Exempt Organizations
-International Tax
-Political Law
-Private Client
-Tax Controversies
-Tax Litigation
-White Collar Defense

For more information, please visit us at www.caplindrysdale.com.

Washington, DC Office:
One Thomas Circle, NW
Suite 1100
Washington, DC 20005
202.862.5000
        New York, NY Office:
600 Lexington Avenue
21st Floor 
New York, NY 10022
212.379.6000

___________________________

Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.

© 2017 Caplin & Drysdale, Chartered
All Rights Reserved.