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Winter 2012


Below is a summary of some important tax benefits available in 2012:


  • Annual exclusion from gift taxes (the amount an individual may give to an unlimited number of donees each year) remains at $13,000; the annual exclusion for gifts to a non-citizen spouse increases from $136,000 to $139,000. 
  • Federal estate and gift tax exemption will increase to $5,120,000 per person (due to indexing for inflation), and the estate tax exemption remains portable at death. The federal estate and gift tax rate is still a flat 35%. These rules will expire at the end of 2012.
  • Generation-skipping tax exemption increases to $5,120,000 in 2012.
  • Massachusetts estate tax exemption (threshold) remains at $1,000,000 per person. 
  • Maximum 401 (k) and 403(b) contribution amounts increase to $17,000 per year, an increase of $500. Workers 50 years of age or older in 2012 can continue to contribute an additional $5,500 to their 401 (k) and 403(b) plans, bringing the total contribution amount to $22,500. 
  • Basic IRA contribution amount remains at $5,000, and individuals 50 years of age and older can continue to make an additional $1,000 "catch up" contribution. 
  • Single taxpayers with adjusted gross income of less than $110,000 (up to $125,000) and joint taxpayers with adjusted gross income of less than $173,000 (up to $183,000) can make nondeductible contributions to a Roth IRA. There is still no income limitation for rolling over a regular IRA to a Roth IRA; however, there is no longer the ability to defer the tax payment created by the rollover.
  • The annual amount of earnings subject to social security taxes increases to $110,100. The social security tax rate for employees is scheduled to increase back to its usual rate of 6.2%, unless the 2011 "payroll tax holiday" that decreased the rate from 6.2% to 4.2% is extended by Congress. There is also a proposal to decrease the rate to 3.1 %.
  • The kiddie tax threshold remains at $1,900, and applies to children under 19 years of age and to full time students under 24 years of age.

Trusts and Estates Practice Group

Mirick O'Connell

100 Front Street

Worcester, MA  01608

t 508.791.8500

f 508.791.8502


1800 West Park Drive, Suite 400

Westborough, MA  01581

t 508.898.1501

f 508.898.1502
































This client alert is intended to inform you of developments in the law and to provide information of general interest.   It is not intended to constitute legal advice regarding a client's specific legal issues and should not be relied upon as such.  This client alert may be considered advertising under the rules of the Massachusetts Supreme Judicial Court.