Under the American Taxpayer Relief Act of 2012 (ATRA), the federal estate-tax exemption is permanently set at $5 million with a top 40% rate. ATRA also provides for inflation indexing of the exemption, beginning in 2013. The figures for the past four years, which show a modest increase for 2016, are as follows:

Year                Exemption amount

2013                     $5.25 million

2014                     $5.34 million

2015                     $5.43 million

2016                     $5.45 million

 

This estate-tax exemption provides protection for many, but not all, upper-income individuals. In any event, overall estate planning is still necessary.