Update of Minnesota Gift and Estate Tax Provisions

The Federal estate/gift tax and Minnesota estate tax exemption rate for 2018 and 2019 are as follows:

Tax Year 2018 2019
Federal  gift/estate tax exemption $11,200,000 $11,400,000
Federal  gift/estate tax rate 40% 40%
Federal  annual gift tax exclusion $15,000 per recipient $15,000 per recipient
Federal  GST exemption $11,200,000 $11,400,000
Federal  GST tax rate 40% 40%
Minnesota estate tax exemption $2,400,000 $2,700,000
Maximum Minnesota estate tax rate 16% 16%

The Minnesota estate tax rate and exemptions are in the midst of a phase-in of new rates and exemption amounts passed by the legislature in 2014:

Year MN Estate Exemption MN Estate Tax Rate
2014 $1,200,000.00 9-16%
2015 $1,400,000.00 10-16%
2015 $1,600,000.00 10-16%
2017 $1,800,000.00 10-16%
2018 and thereafter $2,000,000.00 10-16%

Minnesota retroactively repealed its briefly enacted gift tax in 2014; however, the State continues to apply a look back period to include gifts made by a decedent within three years of his date of death in his estate for estate tax purposes. However, a bill has been introduced to delay the application of the three year look-back period to decedents dying after June 30, 2016. Otherwise, currently the state of Minnesota does not tax gifts made by an individual during his life.

Currently the federal estate and gift unified credit amount is $5.45 million and the annual gift exclusion amount is $14,000.00. The top federal estate tax rate is 40%.

To maximize the amount you can transfer free of state or federal gift and estate taxes, you should contact an attorney who specializes in estate and tax planning.

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