As we turn the calendar to 2023 and the holiday gift-giving season is behind us, now is the time to consider this year’s changes to the estate and gift tax exemption. You may recall from earlier columns that the estate and gift tax exemption is the amount of money or assets the government lets you give away over your lifetime and at your death, combined, without having to pay estate or gift taxes.
This year, the federal estate and gift tax exemption for U.S. citizens has increased from $12.06 million to $12.92 million, meaning that you can give away an additional $860,000 in the aggregate to non-spouse family members and loved ones free of federal estate and gift tax. Of course, the exemption amount is “automatically” scheduled to “sunset” on December 31, 2025, reducing the federal estate and gift tax exemption to $5 million indexed for inflation (about $7 million in 2023 dollars).
