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    4. Gift and Estate Tax: Numbers, numbers, numbersArticles

    Article

    Gift and Estate Tax: Numbers, numbers, numbers

    Jan 22, 2023

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    By Deborah Anderson

    The following list contains some of the “number” changes (many based on mandated inflation adjustments) that you might find interesting and helpful for 2023 gift and estate tax planning (with 2022 comparative numbers). Many of the tax law changes within the Tax Cuts and Jobs Act are temporary as they sunset after a specific date.

    Federal Transfer Tax Items

      2022 2023

    Top estate tax rate

    40% 40%

    Top gift tax rate

    40% 40%

    Top generation-skipping tax (GST) rate

    40% 40%

    Annual gift tax exclusion per donee

     
    The gift tax exclusion per donee is subject to an inflation adjustment, which has been determined for 2022 and 2023.

    $16,000 $17,000

    Applicable lifetime gift tax exemption

     
    The 2022 lifetime gift tax exemption is made up of $10,000,000 of basic exclusion and $2,600,000 of inflation adjustment. For 2023, the basic exclusion is $10,000,000 and $2,920,000 of inflation adjustment.

    $12,060,000 $12,920,000

    Applicable estate tax exemption

     
    The 2022 lifetime gift tax exemption is made up of $10,000,000 of basic exclusion and $2,600,000 of inflation adjustment. For 2023, the basic exclusion is $10,000,000 and $2,920,000 of inflation adjustment.

     
    The exemption amount does not reflect “portability,” which is the ability of a surviving spouse to utilize the unused estate exemption of a spouse who died in or after 2011.

    $12,060,000 $12,920,000

    Applicable generation-skipping tax (GST) exemption

     
    The 2022 lifetime gift tax exemption is made up of $10,000,000 of basic exclusion and $2,600,000 of inflation adjustment. For 2023, the basic exclusion is $10,000,000 and $2,920,000 of inflation adjustment.

    $12,060,000 $12,920,000

    Transfers to a spouse during life or at death (U.S. citizens)

    Unlimited Unlimited

    Annual gift tax exclusion for transfer to non-citizen spouse

     
    The 2022 annual gift tax exclusion for transfers to a non-citizen spouse is made up of $100,000 of basic exclusion and $64,000 of inflation adjustment. For 2023, the basic exclusion is $100,000 and $75,000 of inflation adjustment.

    $164,000 $175,000

    Reporting threshold for gifts received from foreign corporations and partnerships

     
    The 2022 reporting threshold for gifts received from foreign corporations and partnerships is made up of $10,000 of basic exclusion and $7,339 of inflation adjustment. For 2023, the basic exclusion is $10,000 and $8,567 of inflation adjustment.

    $17,339 $18,567

    Reporting threshold for gifts received from non-resident aliens and foreign estates

    $100,000 $100,000

    California Transfer Tax Items

      2022 2023

    Top California estate tax rate—there is no California estate tax

    N/A N/A

    Top California gift tax rate—there is no state gift tax

    N/A N/A

    Florida Transfer Tax Items

      2022 2023

    Top Florida estate tax rate—there is no Florida estate or inheritance tax

    N/A N/A

    Top Florida gift tax rate—there is no state gift tax

    N/A N/A

    Illinois Transfer Tax Items

      2022 2023

    Top Illinois estate tax rate

    16% 16%

    Estate tax exemption

    $4,000,000 $4,000,000

    Top Illinois gift tax rate—there is no state gift tax

    N/A N/A

    Maryland Transfer Tax Items

      2022 2023

    Top Maryland estate tax rate

     
    (Inheritance tax rate is 10% with no exemption amount.)

    16% 16%

    Estate tax exemption

    $5,000,000 $5,000,000

    Top Maryland gift tax rate—there is no state gift tax

    N/A N/A

    Massachusetts Transfer Tax Items

      2022 2023

    Top Massachusetts estate tax rate

    16% 16%

    Estate tax exemption

    $1,000,000 $1,000,000

    Top Massachusetts gift tax rate—there is no state gift tax

    N/A N/A

    New Hampshire Transfer Tax Items

      2022 2023

    Top New Hampshire estate tax rate—there is no New Hampshire estate or inheritance tax

    N/A N/A

    Top New Hampshire gift tax rate—there is no state gift tax

    N/A N/A

    New York State Transfer Tax Items

      2022 2023

    Top New York estate tax

     
    (If estate just 5% more than exemption, there is a “cliff” taxing on full value of estate, not just the amount over exemption.)

    16% 16%

    Estate tax exemption

    $6,110,000 $6,580,000

    Top New York gift tax rate—there is no state gift tax

     
    Estates of decedents dying on or after January 16, 2019, and before January 1, 2026, will need to add back any taxable gift made during the preceding three-year period ending on the decedent’s date of death. This does not apply to non-residents of NYS or to gifts of real or tangible personal property having an actual situs outside NYS at the time of the gift. Gifts made between January 1, 2019, and January 15, 2019, are not included in the add back.

    N/A N/A

    Rhode Island Transfer Tax Items

      2022 2023

    Top Rhode Island estate tax rate

    16% 16%

    Estate tax exemption

    $1,648,611 $1,733,264

    Top Rhode Island gift tax rate—there is no state gift tax

    N/A N/A

    Virginia Transfer Tax Items

      2022 2023

    Top Virginia estate tax rate—there is no Virginia estate or inheritance tax

    N/A N/A

    Top Virginia gift tax rate—there is no state gift tax

    N/A N/A

    District of Columbia Transfer Tax Items

      2022 2023

    Top D.C. estate tax rate

    16% 16%

    Estate tax exemption

     
    Effective for persons dying after January 1, 2021, the Estate Tax Exemption is $4,000,000. It is scheduled to increase each year beginning in 2022 by a cost-of-living adjustment. The 2023 exemption is estimated.

    $4,254,800 TBD
    (estimated to be $4,594,000)

    Top D.C. gift tax rate—there is no state gift tax

    N/A N/A

    Questions?

    The Nixon Peabody Private Clients group will be pleased to answer any questions you may have. Please do not hesitate to contact us. Thank you.

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