Tennessee Repeals Gift Tax
In a surprising move, the Tennessee legislature has repealed Tennessee gift taxes, effective for gifts made on or after January 1, 2012. This is welcome news for a lot of our clients who plan to make a $5.12 million gift later this year. Our clients have been considering various ways to make their gifts without paying Tennessee gift tax. They will no longer have to worry about the gift tax.
Some of our clients knew that a change in the gift tax might occur later this year and have made large loans to their children. These clients will now consider forgiving the loans or giving other assets to their children.
Tennessee’s repeal of its gift tax leaves Connecticut as the only state that charges gift taxes.
The fiscal note for this bill estimated that it will cost the state approximately $15 million per year in revenue. I am sure that the revenue loss for 2012 will be a significantly higher amount due to the window of opportunity for making tax-free gifts at the federal level.