Unified Credit A credit is an amount that eliminates or reduces tax. A unified credit applies to both the gift tax and the estate tax. You must subtract the unified credit from any gift tax that you owe. Any unified credit you use against your gift tax in one year reduces the amount of credit that you can use against your gift tax in a later year. The total amount used against your gift tax reduces the credit available to use against your estate tax. Previously, the unified credit was $192,800, which eliminated taxes on a total of $600,000 of taxable gifts and taxable estate. These amounts were increased for gifts made, and for estates of decedents dying, after 1997. The following table shows the unified credit and the applicable exclusion amount for the calendar year in which a gift is made or a decedent dies. Year Unified Credit Applicable Exclusion Amount 1998 $202,050 $ 625,000 1999  211,300 650,000 2000 and 2001  220,550 675,000 2002 and 2003  229,800 700,000 2004  287,300 850,000 2005  326,300 950,000 After 2005  345,800 1,000,000 For examples of how the credit works, see Applying the Unified Credit to Gift Tax and Applying the Unified Credit to Estate Tax, later.