IRS Announces Indexed Tax Items for 2023

The IRS has announced the values for 2023 of various tax items that are indexed annually for inflation. In general, values have been adjusted upward about 7.0%.

Of particular interest to gift planners, the unified gift and estate tax exemption amount will be $12,920,000 ($25,840,000 per couple) in 2023, an increase from $12,060,000 ($24,120,000 per couple). So, next year a couple that takes advantage of the portability of unused estate tax exemption will be able transfer nearly $26 million to heirs without triggering any federal estate tax.

For the second year in a row, the annual gift tax exclusion will also increase, from $16,000 per person ($32,000 per couple) this year to $17,000 per person ($34,000 per couple) next year. For example, in 2023 a married couple with two children will be able to give each of them $34,000, $68,000 in total, without making a taxable gift.

Also of interest, the standard deduction in 2023 will increase to $27,700 for married couples filing jointly and to $13,850 for single filers, an increase of $1,800 and $900, respectively. Taxpayers who are 65 or older will qualify for an additional $1,500 in standard deduction on top of that (an additional $1,850 if single and not a surviving spouse).

See Revenue Procedure 2022-38 for complete details, including all federal income tax schedules for 2023.