Inflation is hitting Americans hard. Recently, the consumer price report showed an increase of up to 8.2 % compared to a year ago. Every year the IRS adjusts for next year’s taxes. The increases are part of the government’s annual inflation changes affecting income tax brackets, standard deductions, estate tax, and many other provisions. Inflation will drive up over 60 tax provisions.
Individuals and wealthy Americans, starting in 2023, can now transfer up to $12.92 million without triggering a federal estate tax bill, an increase from $12.06 million this year. The annual limit on tax-free gifts has risen from $16,000 to $17,000k. Married couples can share transfers of up to $26 million from the current $24 million.
The first $175,000 of gifts to a spouse that is not a citizen of the United States will not be included in the total amount of taxable gifts made during the year. For a decedent dying in the year 2023, if the executor elects to use the special use valuation method for qualified real property, the estate tax cannot exceed $1,310,000.
Without Congress’s action, the estate tax exclusion will sunset after the year 2025. We suggest a review of your estate plan to take advantage of these limits while they exist.
