By Joel Krooks, Esq.

The IRS just released the estate tax exemption amount and the annual exclusion amount for the year 2023. Both amounts are set to increase from 2022.

The estate tax exemption amount will increase from $12.06 million in 2022 to $12.92 million per person in 2023. This is a $860,000 increase. This means that if a person dies in 2023 and has an estate of over $12.92 million then that person’s estate may owe federal estate taxes.

The Annual Exclusion amount is also increasing from $16,000 to $17,000. In 2023, a person can gift $17,000 to an individual without having gift tax consequences. For example, if a mother gives $17,000 to her son as a gift, the mother is not required to file a gift tax return and her estate tax exemption will not be diminished.

The current federal estate exemption amounts are scheduled to sunset at the end of 2025 and will likely decrease to approximately the $5 million adjusted for inflation unless Congress proactively takes action to extend the current increased exemptions. It is important to discuss the potential consequences of this with an estate planning attorney.

At Littman Krooks, we can assist you with your estate planning and determining an estate plan that is best suited for you. Contact our office today if you are interested in learning more about the estate tax exemption and annual exclusion amounts.