The Internal Revenue Service has announced inflation adjustments to exemptions and exclusions for estate, gift and generation-skipping transfer taxes for tax year 2023.
For gifts made in 2023 and for estates of decedents who die in 2023, the estate tax, gift tax and generation-skipping transfer tax exemption amount is $12,920,000 (or $25,840,000 for a married couple that elects to split gifts on gift tax returns). This is an increase from the 2022 exemption amount, which is $12,060,000 (or $24,120,000 for a married couple that elects to split gifts on gift tax returns).
The annual gift tax exclusion amount for 2023 is $17,000 per donee, or $34,000 for gift-splitting married couples. This is an increase from the 2022 annual gift tax exclusion, which is $16,000.
Finally, the gift tax exclusion amount for gifts made to a non-U.S. citizen spouse in 2023 is $175,000.
The issued adjustments are part of the Tax Cuts and Jobs Act of 2017, which increased the estate tax, gift tax, and generation-skipping transfer tax exemption from $5,000,000 to $10,000,000, indexed for inflation. However, this provision will sunset at the end of 2025. Without further Congressional action, on January 1, 2026, the gift tax, estate tax and generation-skipping transfer tax exemptions will decrease to $5,000,000, adjusted for inflation ($10,000,000 adjusted for inflation for gift-splitting married couples).