Starting in 2023, individuals can transfer up to $12.92 million to heirs, during life or at death, without triggering a federal estate-tax bill, up from $12.06 million in 2022, reports CNBC’s recent article entitled “IRS bumps up estate-tax exclusion to $12.92 million for 2023. Here’s what that means for wealthy Americans.”
As married couples may share exclusions by electing portability, their combined limits are double, allowing transfers of up to nearly $26 million for 2023, compared to just over $24 million this year.
Next year, there’s also a higher annual limit on tax-free gifts. In 2023, filers can give away $17,000 per recipient, without reducing their $12.92 million lifetime exclusion.
That’s an increase from this year’s $16,000.
These increases are part of the IRS’s annual inflation adjustments, impacting federal income tax brackets, standard deductions and dozens of other provisions.
With the stock market down in 2022, many are sitting on lower-value portfolios and the higher exclusion next year may provide opportunities for “more aggressive” estate-planning techniques, such as shielding wealth via trusts, he said.
The estate-tax exclusion has roughly doubled since Republicans’ signature tax overhaul in 2017. Without further action from Congress, the provision will sunset after 2025, leaving a limited time to leverage the higher limits.
Regardless of what legislation happens, 2023 is shaping up to be a very big year for estate planning.
To learn more about estate planning in the East Valley, Gilbert, Mesa and Queen Creek, schedule your free consultation with Attorney Jake Carlson by using one of the links above.
Reference: CNBC (Oct. 19, 2022) “IRS bumps up estate-tax exclusion to $12.92 million for 2023. Here’s what that means for wealthy Americans”