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2009 Gift tax exemption rises to $13,000

October 17, 2008

The IRS issued the inflation adjustments for income and gift taxes yesterday (Rev. Proc. 2008-66). The adjustments include updated rate tables and exemption amounts. A few highlights:

- The Standard deduction goes up $250 for singles, to $5,700, and by $500 for joint filers, to $11,400.
- The personal exemption rises from $3,500 to $3,650.
- The kiddie tax, which can apply to "children" up to age 24, will kick in at $950 of income.

The increase in the gift tax is no minor matter. The annual exclusion is availabe each year. A couple with two children can move $52,000 each year to the next generation free of estate and gift tax at that rate. If they do it every year, it definitely adds up.

The TaxProf has more.

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