New Year—New IRS Adjusted Exclusions, Limitations, and Deductions

The Internal Revenue Service has released Revenue Procedure 2023-24, which adjusts for inflation the amounts that apply to exclusions, limitations, and deductions taxpayers can utilize.

Starting January 1, 2024, your gift tax annual exclusion (how much you are allowed to give away to each recipient without triggering a need to file a gift tax return) increases from $17,000 to $18,000.

The Unified Credit, or how much you are allowed to give away either during your life on a gift tax return or through your will or estate plan increases to $13,610,000 per person or $27,220,000 per couple. Remember, this amount will be cut in half when the tax cut occurs at the end of 2025.

Your individual retirement account contributions are now limited to $7,000 if you are under 50 years old and $8,000 if you are at least 50 years old. Likewise, the amount you can defer and contribute to your 401(k) or other elective retirement arrangement has increased to $23,000.00 for those under 50 years of age, and $30,000 for those at least 50 using the contribution catch-up provision.

Finally, the standard deduction is increasing for married couples filing their income tax returns jointly to $29,200. Single persons’ standard deductions have increased to $14,600.