2023 Federal Gift And Estate Tax Update

Though subject to change if new legislation is enacted throughout the year, the below items highlight the landscape of federal gift and estate tax law as of January 1, 2023:

• The lifetime exclusion amount for federal gift and estate taxes for the year 2023 increases to $12,920,000 per person, or $25,840,000 for a married couple. These amounts are set to decrease to $5,000,000 per person on January 1, 2026, unless new legislation is enacted before that date.

• The federal lifetime exclusion amount remains “portable,” meaning an individual’s unused exclusion amount transfers to his or her surviving spouse with the proper election on the decedent’s estate tax return. This election must be made within five years of the deceased spouse’s death.

• The annual federal gift exclusion amount increases by $1,000 per person for the year 2023 up to $17,000 per person, or $34,000 for a married couple.

• At the end of 2022, several changes were made to federal required minimum distribution laws including raising the age of RMDs to 73 in 2023, then to 75 in 2033. Your financial advisor can assist you in understanding further applicable changes.

• The highest federal estate tax, gift tax, and GST tax rate remains stable at 40%.

See this piece from JD Supra for more extensive discussion of current federal gift and estate tax law. Happy New Year!