Client Tip for December 2017: Minimum Wage
Effective January 1, 2018, the minimum wage in several states will be increasing. Federal law provides that companies who are engaged in the retail or service industry whose annual gross receipts are less than $500,000 are not required to pay the state minimum wage rate. The Federal minimum rate is $7.25 per hour (last increased July 2009). When the state minimum wage rate is higher than the federal rate, workers are paid the higher rate.
Missouri’s minimum rate is increasing to $7.85 (currently $7.70) per hour beginning January 1, 2018.
The minimum wage in Illinois for adults over the age of 18 who are no longer probationary remains at $8.25 per hour for 2018. It’s higher in Chicago where the minimum wage is $11.00 per hour and will increase to $12.00 per hour in July 2018.
IRS Announces 2018 Estate And Gift Tax Limits*
IRS announced that for 2018 the estate and gift tax exemption is $5.6 million per individual (up from $5.49 million in 2017). That means an individual can leave $5.6 million to heirs and pay no federal estate or gift tax. A married couple will be able to shield $11.2 million from federal estate and gift taxes. Also, the annual gift exclusion amount to each individual is $15,000 ($30,000 if the donors are married and make a joint gift) for 2018 (up from $14,000 ($28,000 if the donors are married and make a joint gift) since 2013.
The federal estate and gift tax exemptions rise with inflation. Plan to make annual gifts early each year to avoid a missed opportunity.
Be aware, however, that the $11.2 million exemption per couple is not automatic. An unlimited marital deduction allows you to leave all or part of your assets to your surviving spouse free of federal estate tax. But in order to use your late spouse’s unused exemption — a move called “portability” — you have to elect it on the estate tax return of the first spouse to die, even when no tax is due. The problem is if you do not know what portability is and how to elect it, your estate could be hit with a surprise federal estate tax bill.
If your estate is large enough to be a taxable estate, the tax rates are:
Illinois – Single
First $1 Million
Over $1 Million
Over $4 Million
Rate of Tax
18% – 39%
Up to 28.5% Effective Rate
*NOTE: Proposed legislation currently before congress may change the gift and estate laws.