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Personal Tax Planning: Do Americans Expect Inflation Adjustment?

The IRS has announced the 2023 adjustments.

There were several provisions of the Internal Revenue Code provided for the annual adjustments of dollar amounts based on certain inflation criteria.

The inflation adjustments of 2023 for the gift, estate, and GST tax exemptions are fairly significant, which increased by nearly an amount of $900,000 from 2022, which are the following

– Annual Exclusion for Gifts to the Non-U.S. Citizen Spouses: For the gifts to non-U.S. citizen spouses this year 2023, the annual exclusions will increase to $175,000 (up from $164,000 in 2022).

– Estate Tax Exemption and Unified Gift: For gifts made and estates of those Estate Tax Exemption that does this year, the exemption amount will rise to an amount of $12,920,000 (up from $12,060,000 the last year 2022).

– GST Tax Exemption: The GST tax exemption will also increase to $12,920,000 this year for generation-skipping transfers ( from up to $12,060,000 the last year 2022).

– Gift Tax Annual Exclusion: The gift tax annual exclusion will increase by up to $17,000 for gifts made in 2023 (up from $16,000 back in 2022).

Income Taxes

Income Tax Brackets: This year the 2023 individual’s tax brackets as well as trusts and estates have also been adjusted upwards:

– Married joint filers: The top tax rate of over 37% does apply the taxable income of over $693,750 in 2023 (up from $647,850 in the year 2022)

– Single Filers: The top tax rate of 37% does apply to the taxable income of over $578,125 in 2023 (up from $539,900 in the last year 2022).

– Estates and Trusts: Trusts and estates have a far more compact tax bracket, and the top tax rate of over 37% does apply to the taxable income over $14,450 in 2023 (up from $13,450 of the last year 2022).

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