Recently, the IRS announced the 2023 estate and gift tax exemption amounts. These amounts change slightly each year, and are an important consideration in a person’s estate planning process.
As we have previously discussed the IRS sets a certain amount that a person is allowed to give during their lifetime or at death without estate or gift tax liability. [Read prior blog posts here and here.] The IRS adjusts the amount each year. For 2023, the exemption amount will be $12.92 million per person, up from $12.06 million per person in 2022. Do remember that in 2026, the exemption amount will significantly decrease, going to $5 million per person (adjusted for inflation, it will likely be closer to $7 million) and plan accordingly. As I always tell people at my estate planning programs, if you think you are even close to the current exemption amount, you need to be working with an attorney and an accountant now to take steps to ensure you (or your estate) will not face estate or gift tax liability.
The annual gift tax exemption will also increase, going from $16,000 in 2022 to $17,000 in 2023. Again, to read more about gift taxes and the annual exemption, click here.
Additionally, keep in mind that we have a podcast episode on estate and gift taxes with Kit Tovar. You can listen to that here.