Here we have provided a “cheat sheet” to keep in mind for 2023 federal estate, gift and GST exemptions, as well as exemptions and inheritance tax consequences in specific states where a number of our clients reside.
Federal Estate, Gift, and GST Tax
Below is a summary of the current federal estate, gift, and generation-skipping transfer tax provisions for 2023. Note that, under current law, the increases in exemption amounts that began in 2018 are set to expire in 2026, at which point they will revert back to the pre-2018 numbers (i.e., $5,490,000 per person, indexed for inflation).
Gift Tax, Generation Skipping Transfer Tax and Estate Tax Exemptions (Unified)
- Single: $12,920,000
- Married: $25,840,000
- Rate: 40%
- Gift Tax Annual Exclusion Amount: $17,000 per donee
- Gift Tax Exclusions for medical and educational expenses paid directly to provider
State Estate and Gift Tax
States vary in whether and how they tax transfers of property. A gift tax is imposed on property transferred while the donor is still alive. Estate taxes and inheritance taxes are imposed on the transfers of property after the decedent’s death. Below is a summary of estate, gift and inheritance tax laws for residents of the following states:
|STATE||GIFT TAX||ESTATE TAX||INHERITANCE TAX||TOP RATE||EXEMPTION AMOUNT|
|New Jersey||No||No||Yes, if inheritor is someone other than decedent’s spouse, ancestor, descendant, or stepchild.||16%||N/A|
|Pennsylvania||No||No||Yes, if inheritor is someone other than decedent’s spouse, or parent (if decedent 21 or younger).||Depends on inheritor’s relationship with decedent||N/A|
|Maryland||No||Yes||Yes, inheritor is someone other than decedent’s spouse, descendant, descendant’s spouse, ancestor, stepchild, stepparent or sibling.||Estate tax: 16%
Inheritance tax: 10%
California, Florida, Virginia, and Wisconsin do not have estate, gift or inheritance tax.