Tax Law Changes for 2023

{2 minutes to read} In the beginning of the year, we try and create a communication to all of our friends and clients, and people we know, about what changes are taking place from a tax perspective. There are lots of changes every January, and this year is no exception. 

Each year, the government changes the amount of money that you get from an estate planning standpoint and social security. The estate and gift tax exclusion amounts have increased in this new year. For someone who dies in 2023, the numbers are as follows:

Federal gift and estate tax has been raised to $12,930,000 per person. That means that in 2023, a person can gift up to that amount during their lifetime, or after death, free of federal and gift tax. So that brings the amount for a couple just shy of $26 million. Remember though, the increased federal estate and gift tax exclusion amounts, as we mentioned in some earlier blogs, will be ending on January 1st, 2026, and those numbers will go back to an amount closer to about half of what it will be in 2026.

So, if you have a situation where you have an estate that is above, let’s say $10 million, you may think ok I have no estate tax exposure. The exemption is 12.9 Million today. While in reality, you may be exposing yourself to some significant estate taxes. As the exemption is due to be cut in half on 1/1/2026. So if you die, in 2026 and no new laws are created between now, and then you may incur a very large tax.

Also, in addition to the federal estate tax, I live in New York, and every state has different rules about the estate tax. New York State has an exemption amount, which has increased to $6.8 million, let’s say close to about half of what the federal estate tax exemption is. And that New York State estate tax can go as high as 16%. So, it is very possible that you could experience an estate tax of a significant amount, which is due nine months from the date of death. The assumption was that I could give away $12 million, or I could pass $12 million, or $26 million if I’m married, but that is not always the case because that would be just the federal amount.

Below is a link to a convenient piece about all the tax law changes for 2023. Please take a look at it, and if you need anything at all, give us a call. We’d be happy to review any tax matter that you have pertaining to your personal financial planning. 

Thank you very much and have a great day.

Registered Representative offering Securities through American Portfolios Financial Services, Inc. (APFS) Member FINRA/SIPC. Investment Advisory Services are offered through G&G Planning Concepts, Inc. which is not affiliated with APFS.  Strategic Wealth Advisors Network and Gassman Financial Group are not affiliated with APFS.

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This material is for informational purposes only. Neither APFS nor its Representatives provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions. American Portfolios Financial Services, Inc.(APFS) and American Portfolios Advisors, Inc.(APA) are not affiliated with any other named business entities mentioned.