Happy New Year! The new year brings many new beginnings: new resolutions, new diets, new commitments, and new annual gift tax and estate tax exclusions.
The US Internal Revenue Service announced that the annual gift tax exclusion is increasing next year due to inflation. The annual gift tax exclusion will be $17,000 per recipient for 2023—the highest amount ever. Further, the annual amount that one may give to a spouse who is not a US citizen will increase to $175,000 in 2023.
In addition, the estate and gift tax exemption will be $12.92 million per individual for 2023 gifts and deaths, up from $12.06 million in 2022. This increase means that a married couple can shield a total of $25.84 million without having to pay any federal estate or gift tax. For a couple who has already maxed out lifetime gifts, this means that they may now give away another $1.72 million in 2023.
It should be noted that although the IRS has announced that the lifetime estate and gift tax exemption will increase to $12.92 million in 2023, that amount is set to be cut in half at the start of 2026. Any planned giving that takes advantage of the higher annual exclusion amount MUST be complete before the end of 2025. Yet another reason to get your estate plan done in 2023!
If getting your estate plan done is on your list of resolutions for 2023, contact us at Chiang Law Firm PLLC today!