estate planning
2023 Gift and Estate Tax Exemption
2023 gift and estate tax exemption and annual gift exclusion. How much can you gift without a gift tax?
This article explains what the estate tax could be after the 2024 election and what it has been in past years.
How Will the Election Impact the Estate Tax?
The 2024 estate tax exemption amount is $13,610,000. It will increase again for inflation in 2025.
In 2010, Obama raised the estate tax exemption to $5,000,000, indexed for inflation.
In 2017, Trump doubled the estate tax exemption to $10,000,000, also indexed for inflation. However, Trump's exemption is scheduled to sunset at the end of 2025.
As a result, the president and the Congress elected in November will determine the fate of the estate tax. There are three ways this could go:
- Nothing changes and Trump's tax laws sunset at the end of 2025, and the 2026 estate tax exemption will default to approximately $7,000,000 ($5,000,000 indexed for inflation since 2011).
- Congress and the new president make Trump's tax laws permanent and the estate tax exemption indexed for inflation rises to $14M - $15M.
- Congress and the new president choose neither of these options and pass a new tax law.
Historical Gift and Estate Exemptions
The current estate and gift tax situation is very positive compared to years past.
Below is a table showing the historical estate tax exemption, estate tax rate and annual exclusion since 1997.
Notice that in 1997 the estate tax exemption was only $600,000, and the estate tax rate was 55%, which meant that if you had an estate worth more than $1,000,000 your estate tax would be $1,000,000 - $600,000 = $400,000 (55%) = $220,000. Yikes!
| Year | Gift and Estate Tax Exemption | Estate Tax Rate | Annual Gift Exclusion |
| 1997 - 2001 | $600,000 - $675,000 | 55% | $10,000 |
| 2002 - 2005 | $1,000,000 - $1,500,000 | 50% - 47% | $11,000 |
| 2006 - 2008 | $2,000,000 | 46% - 45% | $12,000 |
| 2009 | $3,500,000 | 45% | $13,000 |
| 2010 | no estate tax 😎 | no estate tax 😎 | $13,000 |
| 2011 - 2017 | $5,000,000 - $5,490,000 | 35% - 40% | $13,000 - $14,000 |
| 2018 | $11,180,000 | 40% | $15,000 |
| 2019 | $11,400,000 | 40% | $15,000 |
| 2020 | $11,580,000 | 40% | $15,000 |
| 2021 | $11,700,000 | 40% | $15,000 |
| 2022 | $12,060,000 | 40% | $16,000 |
| 2023 | $12,920,000 | 40% | $17,000 |
| 2024 | $13,610,000 | 40% | $18,000 |