On October 18, 2022, the IRS issued Revenue Procedure 2022-38 (https://www.irs.gov/pub/irs-drop/rp-22-38.pdf) that includes a number of significant changes to estate, gift and generation-skipping transfer tax related exemptions and amounts. Perhaps most significantly is the substantial increase in the 2023 basic exclusion amount (also often referred to as the “Unified Credit” or the “Estate/Gift Tax Exemption”) from $12,060,000 in 2022 to $12,920,000 beginning for decedents dying in 2023 and for gifts made in 2023 by US citizens or residents. Further inflation adjustments (presumably increases) are scheduled to occur in 2024 and 2025, but the basic exclusion amount will drop significantly in 2026 without any contrary tax legislation to roughly half of the 2025 amount.
The annual gift tax exclusion will increase as well to $17,000, one year after the 2022 bump to $16,000. This amount is inflation adjusted as well, but in $1,000 increments. A lesser known annual exclusion applicable to spouses who are not citizens of the US was increased as well to $175,000.
This is the most significant inflation adjustment to the estate, gift and GST related exemptions. Accordingly, many individuals might wish to revisit their gift planning in light of the 2023 increase. Please contact your Certus attorney, or the author, Mark Shiller, for any questions regarding such matters.
The full notice can be found on the IRS website at: