Due to the rise in inflation this past year, Revenue Procedure 2022-38 was just recently released announcing the new estate and gift tax exemption amount as well as the new annual exclusion amount for gifts made in 2023.
Now, estates of decedents who die during 2023 have a basic estate and gift tax exclusion amount of $12,920,000, up from a total of $12,060,000 for estates of decedents who died in 2022. This total is the amount that can be transferred at death or during life (or a combination thereof) without implication of estate or gift taxes. In historical context, this increase of $860,000 is one of the largest inflationary adjustments that has been made.
Additionally, the annual exclusion for gifts increases to $17,000 for calendar year 2023, up from $16,000 for calendar year 2022. This is the amount that a person can gift to another person in a calendar year without any implication of gift taxes.
What does this all mean? Basically, that there are more opportunities to do strategic estate planning taking advantage of the higher exemption amount in advance of a coming decline in the exclusion in 2026 ($5.49MM indexed for inflation in 2026) to help mitigate estate and gift taxes.Learn more on advanced estate planning topics by requesting my book “Estate Planning Secrets of the Affluent, Second Edition” or request a strategic planning meeting at (760) 448-2220.