A client from Orland Park recently inquired regarding the 2023 lifetime exemption amounts for gifts and transfers at death. The update is that the lifetime exemption for gifts and transfers at death has been increased in 2023 to $12.92 million (up from $12.06 million for 2022).

What this means in broad terms is that a person can gift up to $12.92 million during his/her life or transfer that amount upon his/her death without paying federal gift or estate taxes.

The increased was automatically made pursuant to an inflation factor built into Tax Cuts and Job Act of 2017.  However, the “generous” tax exemption is due to expire December 31, 2025.  At that time the exemption is expected to be reduced to close to $5 million (unless Congress takes action to change the amount.)

The Illinois exemption for estate taxes remains $4 million.

 

The annual exclusion for gifts has also been increased to $17,000 per recipient/donee for 2023 (up from $16,000 for 2022).  That is the maximum amount gift any person may give away in 2023 without anyone having to pay tax or file a tax return. This annual gift amount does not reduce the lifetime exemption amount.