The IRS has just released inflation-adjusted tax numbers for 2023. Among the most notable adjustments are:
- An increase in the gift, estate and GST tax exemptions amounts from $12,060,000 to $12,920,000.
- An increase in the gift tax annual exclusion amount from $16,000 to $17,000.
- An increase in the starting point for the 37% top marginal income tax rate. This rate will apply to income above $693,750 for married couples and $578,125 for single individuals. The starting point for other tax brackets has also been increased.
- An increase in the standard deduction to $27,700 for married couples and $13,850 for single individuals (or married filing separately).
These inflations adjustments will create new opportunities for planning to reduce estate tax exposure through gifting. These opportunities are magnified by the current depressed asset values, which effectively allow the transfer of certain assets at a discount. Further, rising interest rates have made certain estate planning techniques, such as qualified personal residence trusts, and charitable remainder trusts, more attractive. Please contact us if you would like to discuss your estate planning.