Federal Estate & Gift Tax Exemption

The IRS announced that the federal estate and gift tax exemption for 2023 will now equal $12,920,000, which is an inflation-adjusted increase of $860,000 from 2022.  This means that an individual can transfer, during lifetime or at death, $12,920,000 (or $25,840,000 for a married couple) free of estate and gift tax.  As always, transfers between U.S. citizen spouses are free of federal estate and gift tax.  The IRS also increased the amount that can be gifted annually to a non-citizen spouse from $164,000 to $175,000.  

Connecticut Estate & Gift Tax Exemption

Starting in 2023, the Connecticut estate and gift tax exemption will match the federal exemption (unless Connecticut changes its law).  The Connecticut exemption for 2023 is $12,920,000 per individual (up from $9,100,000 in 2022). However, unlike federal law, Connecticut does not allow portability of the exemption to the surviving spouse by filing a timely-filed estate tax return.  In Connecticut, a deceased spouse’s exemption is usually used by creating a credit shelter trust holding the exemption amount for the benefit of the surviving spouse. 

New York Estate Tax Exemption

The New York estate tax exemption amount is $6,580,000 for 2023 (up from $6,110,000).   

Annual Gift Tax Exclusion

You can make annual exclusion gifts of $17,000 per year starting in 2023 (up from $16,000) to as many people as you wish, free of federal and Connecticut gift tax, without using up any of your estate and gift tax exemption. 

Future Changes

Absent action by Congress, the federal estate and gift tax exemption is set to decrease in 2026 to $5,000,000, increased for inflation using 2010 as the base year.  If the federal exemption decreases, the Connecticut exemption will also decrease.  For more information, please contact Lauren R. Cimbol (lcimbol@brodywilk.com) or another BW attorney.