Legal Alert: 2023 IRS Inflation Adjustments

Each year the IRS makes adjustments to a number of tax brackets, exemptions, and other items based on the rate of inflation. The IRS?has just released their list of those adjustments for 2023, a number of which may impact your estate plan.

Increased Retirement Contributions

The IRS has made inflation adjustments allowing for substantial increases to annual contributions to certain retirement accounts. The base contribution limit for a 401(k) is increasing to $22,500, with those 50 and older having their contribution limit raised to $30,000. The base contribution limits for an IRA are increasing to $6,500, with those 50 and older being able to contribute up to $7,500.

Estate and Gift Tax Exemptions

On the estate and gift tax front, the lifetime Federal estate tax exemption is increasing to $12,920,000. The New York estate tax exemption (currently $6,110,000) will likely increase as well, but has not been published yet. The annual gift tax exclusion is increasing to $17,000, meaning a person can give up to $17,000 per person per year without using any of their lifetime estate and gift tax exemption. Spouses can double this amount and make joint gifts of $34,000.

Income tax brackets for most individuals and businesses are increasing as well, along with a host of other tax items throughout the tax code. For many, this could lead to increased take home pay for 2023.

The inflation adjustments for 2023 are exceptionally high, allowing many to save more for retirement and save on taxes. If you want to know how these changes affect your estate plan, contact the attorneys at Cona Elder Law today.