2023 Estate and Gift Tax Exemption
The IRS has announced that in 2023, the estate and gift tax exemption will be increased to $12,920,000 per individual, up from $12,060,000 in 2022. This means that an individual can leave $12.92 million to heirs and pay no federal estate or gift tax and a married couple will be able to leave up to $25,840,000. While the federal exemption amount is quite high, there are some states that have lower state estate and gift tax exemption amounts.
The Future of the Estate and Gift Tax Exemption
The federal estate and gift tax exemption was doubled with the 2017 Tax Cuts and Jobs Act. When the Tax Cuts and Jobs Act was passed, the new rules were set to expire at the end of 2025. However, the federal estate and gift tax exemption amount is continuously debated in congress so we may see a change in these limits before the 2025 sunset.
2023 Annual Gift Exclusion
The annual gift exclusion has increased from $16,000 in 2022 to $17,000 per recipient for 2023. This means that an individual can gift up to $17,000 to as many other individuals as he or she would like. A married couple can each make $17,000 gifts. For example, if a married couple have three children, they can gift up to $34,000 to each child annually without being required to file Form 709, the U.S. Gift Tax Return.
Editor’s Note: This blog post was originally published in 2019, but has been updated to reflect 2023 exemptions.