IRS Announces 2023 Inflation Adjustments to Estate, Gift and Generation-Skipping Tax Exemptions
On October 18, 2022, the IRS released Revenue Procedure 2022-38, which announced 2023 annual inflation adjustments for various tax provisions.
Effective January 1, 2023, the estate and gift tax basic exclusion amount and the generation‑skipping transfer (“GST”) tax exemption are scheduled to increase from $12,060,000 to $12,920,000. This is an increase of $860,000 per person or $1,720,000 for a married couple. Individuals who previously used their entire basic exclusion amount (or GST tax exemption) can utilize these inflation adjustments to make additional gifts in 2023. Please note, however, that absent any legislative action, the basic exclusion amount and GST tax exemption are scheduled to revert to approximately 50% of their current levels (plus inflation) in 2026.
The gift tax annual exclusion amount is set to increase from $16,000 per person in 2022 to $17,000 per person in 2023. Married couples can chose to “split” gifts, which would allow one spouse to make gifts of up to $34,000 to each recipient in 2023.
In addition to the above, the annual exclusion for gifts to a spouse who is not a citizen of the United States will increase from $164,000 to $175,000 in 2023.
To discuss planning techniques that may be appropriate to help you reach your individual planning goals, please contact any member of Kleinberg Kaplan’s Trusts & Estates Practice Group.