How Gift Taxes Work

The annual gift tax exclusion is $17,000 in 2023. This means annually you can give $17,000 to as many individuals as you like without filing a gift tax return. But if you give anyone more than $17,000 per year, you'll need to report the excess on a gift tax return. It's unlikely that you'll have to pay any tax because the gifts are only taxed when they cumulatively reach the $13 million exemption. 

For example, If you give your child $2 million in 2023, you’ll have to report a taxable gift of $2 million. If you die before 2026, your estate tax exemption will be $11 million ($13 million exemption - $2 million gift) instead of $13 million. 

Learn more about what will happen when the gift and estate tax exemption gets cut in half here.

 

Get Started Today: Schedule Your Consultation

 

If you’re interested in learning more about estate planning, please contact an estate planning attorney in Ann Arbor at 734-665-4441.

What Will Happen When the Gift and Estate Tax Exemption Gets Cut in Half

Most Americans have estates that fall under the federal estate and gift tax exemption. However, the exemption is set to be cut in half in 2026. This exemption increased to $13 million (actually $12.92 million) in 2023. In 2026, this exemption resets to $6.8 million (adjusted for inflation between now and then) unless Congress acts in the interim. 

What happens if you make a taxable gift before 2026 but die after 2026 when the exemption has been cut in half? Learn more here.

 

Get Started Today: Schedule Your Consultation

 

If you’re interested in learning more about estate planning, please contact an estate planning attorney in Ann Arbor at 734-665-4441.