Is Estate Tax Exemption Adjusted for Inflation?

Is Estate Tax Exemption Adjusted for Inflation?

The estate tax exemption is adjusted for inflation every year by the Internal Revenue Service, according to Forbes magazine. The estate tax exemption determines the maximum amount of money that individuals can leave their heirs without being subject to the estate tax.

While the estate tax exemption grows with inflation, it is reduced by each gift tax exemption taken throughout a taxpayer's lifetime, explains Forbes. The gift tax exemption determines the maximum dollar amount that can be given as a gift per year without being subject to the gift tax. Gifts provided for certain educational or medical expenses do not count toward these limits, provided they are paid directly to the service provider.