American taxpayers can now protect more of their assets from gift and estate tax in 2023 after the Internal Revenue Service (IRS) made inflation adjustments[1] on Oct. 18. This means individuals may transfer up to $12.92 million in assets to their heirs during life or after death without the amount being subject to estate and gift tax. The 2023 exemption amount is $860,000 higher than the 2022 exemption. For married couples, the exemption totals almost $26 million. Additionally, limits for annual exclusion tax-free gifting will increase to $17,000 in 2023, up from $16,000 in 2022.
Without action from Congress, the estate and gift tax exclusion will shrink on Jan. 1, 2026, reverting the amount to its pre-2018 level of $5 million (adjusted for inflation) per person.
The increase in the estate and gift tax exclusion means that individuals can transfer more to heirs on a tax-free basis. This change presents an opportunity for individuals to meet with their advisor to discuss any updates to their gifting and estate tax strategies. For more information about how these changes apply to your personal tax situation, contact your Windham Brannon advisor today or reach out to Barbara Coats, Courtnay Bazemore or Doug Neal.
[1] Click here for the full list of inflation adjustments from the IRS.
