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IRS Issues Inflation Adjustments for Transfer Taxes Related to Estates and Trusts

In Rev. Proc 2022-38, the IRS provided inflation adjustments for various IRS Code provisions for taxable year 2023, including many relevant to trusts, estates, and gifts.

The 2023 inflation adjustments include:

  • The basic estate and gift tax exclusion amount (and the generation skipping transfer tax amount) will increase to $12,920,000 from the 2002 exemption of $12,060,000;
  • The gift tax annual exclusion will increase from $16,000 to $17,000;
  • The gift tax annual exclusion for gifts to a non-US citizen spouse will be increased to $754,000;
  • The aggregate decrease in a decedent’s gross estate with respect to the qualified valuation of special use property will be limited to $1,310,000;
  • The two percent portion of the estate tax on certain business interested deferred under Code Sec. 6166 will be $1,750,000;
  • The income tax rates for trusts and estates will be 10% for income not over $2,900, 24% for income over $14,450, 35% for income over $10,550 but not over $14,450, and 37% for income over $14,450;
  • The exemption from the “Kiddie Tax” will be $1,250;
  • The alternative minimum tax exemption for a Kiddie Tax child will be limited to the sum of the child’s earned income for the year, plus $8,800;
  • The alternative minimum tax for trusts and estates will be $28,400; and
  • The standard deduction for married couples filing a joint return will be $27,200.

For more information regarding the IRS’s inflation adjustments, or any trust, estate, transfer tax, or fiduciary income tax issue, please contact our office to schedule your consultation. Call 704-248-6325.

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