Estate and Gift Tax Changes

Feb 16, 2023

What are the Estate and Gift Tax Changes in 2023?

Estate and gift taxes are imposed on property transfers made during a person’s lifetime and at death. Such levies are collected by the federal government and many individual states, although Michigan does not, and the taxable amounts are adjusted on an annual basis to account for inflation or deflation. Transfers between US citizen spouses and transfers to certain qualifying trusts for US citizen spouses are generally exempt from federal gift and estate taxes.

The IRS rolled out a slew of revisions for 2023, some of which are in the estate and gift tax categories. Here is a brief rundown of the most important estate and gift tax changes in 2023:

Lifetime Estate and Gift Tax Exemptions

The IRS has revised the lifetime gift and estate tax exemption to $12,920,000. This is up from the $12,060,000 for the 2022 calendar year.

This means that an estate of $12 million won’t have to pay any tax, but an estate of $13 million would have to pay $32,000 in estate tax, which is 40% of the $80,000 over the $12.92 million exemption.

For couples who elect portability on Form 706, the tax exemption is now $25,840,000 (double the $12,920,000 amount for an individual). What this means is that a married couple can give up to $25.8 million in assets tax-free.

Marital Deductions for Spouses

Except for non-citizen survivors, a married couple can continue to deduct an unlimited amount from gift and estate taxes by transferring assets to a spouse during life or upon death. For 2023, the marital deduction for spouses who are not citizens is $175,000.

Annual Gift Tax Exclusion

And finally, the annual gift tax exclusion increases to $17,000 per beneficiary. This means you get up to a $17,000 tax exemption for every person to whom you make a gift in 2023. Since the annual gift tax exclusion is also $17,000 per donor, a married couple may give $34,000 to a single recipient without incurring any gift tax liability.

Note that the tax exemption for gifts applies to each person who receives a gift. So, if you want to give gifts to five different people, you can give each of them $17,000 without any gift tax consequences.

Gift tax changes for 2023

How a Tax Resolution Specialist Can Help

Increases to the estate tax exemption and gift tax exclusion amounts in 2023 are the highest they’ve ever been, shielding more people from these federal levies than ever before. However, if your estate is larger, don’t put off taking action to reduce your potential future tax liability.

A tax resolution specialist can help you find quick resolutions for tax problems or any tax-related issues. With our years of experience and tax knowledge, we can help you understand your options and find the best solution for you. We will also walk you through if you find yourself in any trouble with the IRS or if you want to reduce or eliminate tax debt, file back taxes, or take advantage of other related services.

As one of the leading law firms that have specialists in tax resolution in Grand Rapids, Michigan, we can help you navigate complex tax laws, and you can always feel confident in our abilities to resolve tax problems quickly and efficiently.

Reeder murphy Tax Resolution Specialists are Here to Help You

If you are needing guidance or legal help in dealing with your taxes, give our office a call at (616) 458-3994 or fill out our online contact form to book a free consultation. Then one of our team will walk you through what needs to be done, and get you the help you need.