Gift and Estate Tax Lifetime Exemption / Annual Exclusion Amounts Rise for 2023
For those looking to maximize their annual exclusions and lifetime exemptions for gift and estate taxes before a looming (and potentially drastic) decrease in those limits, there is good news: those thresholds have increased for 2023.
The IRS has announced that the gift tax annual exclusion for 2023 is $17,000, up from $16,000 in 2022. That means you can gift up to $17,000 to any individual without triggering the federal gift tax (and avoid using up any of one’s lifetime gift and estate tax exemption). For married couples, spouses can also give up to $17,000 to the same person (a total of $34,000 per person in 2023.)
The lifetime estate and gift tax exemption limit has risen to $12.92 million per individual for 2023, up from $12.06 million in 2022 (for married couples it is now $25.84 million). That is the total amount that can be gifted over a lifetime without owing federal estate or gift tax.
- The annual exclusion rose to $17,000 (from $16,000)
- The lifetime exemption increased to $12.92 million (from $12.06 million)
- The current limits should rise again in 2024 and 2025 before the entire current framework is scheduled to sunset at the end of 2025
The current gift and estate tax exclusion and exemption limits will rise again in 2024 and 2025 before the entire current framework is scheduled to sunset at the end of 2025. At that time, the gift and estate tax exemption amount will be reduced by approximately one-half (estimated at $6.2 million per individual and $12.4 million per married couple), unless Congress intervenes, which of course is unknown.
Use them before you (potentially) lose them!
That’s why it is so important for anyone with the capacity to do so to maximize their annual exclusions and lifetime exemptions in one form or another. This includes annual cash gifts, discounted asset gifts, 529 plans, as well as lifetime gift, estate and GST exemptions.
We encourage you to talk to your wealth and tax advisors and estate planning attorneys to explore how to make the most of these annual exclusions and lifetime exemptions while you can.