The lifetime estate exclusion amount (also sometimes called the estate tax exemption amount, the applicable exclusion amount, or the unified credit amount) has been increased for inflation beginning January 1, 2023.
Applicable Exclusion Amount
Under the 2010 Tax Relief Act, the lifetime estate and gift tax basic exclusion amount was $5,000,000 and this amount was indexed for inflation after 2011 and increased over time as shown below. Under the 2017 Tax Act, the basic exclusion is increased from $5,000,000 to $10,000,000 for 2018 and the $10,000,000 is indexed for inflation occurring after 2011. This inflation adjustment results in a 2023 applicable exclusion amount of $12,920,000. Congress included a sunset provision in the 2017 Tax Act so the exclusion amount returns to the 2017 exclusion amount (adjusted for inflation) in 2026.
Annual Exclusion Gift Amount
The gift tax annual exclusion (also simply called the annual exclusion) was also changed in 2023 and will be increased to $17,000. This gift tax annual exclusion was indexed for inflation in 1997 and has increased over time as shown below.
For more information, contact Estate Planning attorneys Sarah Richardson Larson, P. Daniel Donohue, Terry N. Prendergast, Matthew W. Van Heuvelen, Mark R. Krogstad, Mary A. Akkerman, or Lori M. Rensink.
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