Each year brings updates to the federal tax exemptions and mileage reimbursement rates.
The annual exclusion amount for gifts in 2023 increases to $17,000 per recipient. This means that individuals can make gifts of up to $17,000 to any number of recipients without being required to report the gifts to the IRS. The federal estate tax exclusion has also increased to $12,920,000. Illinois estate tax exclusion remains at $4,000,000.
The reimbursement rate for business mileage has been increased to 65.5 cents per mile.
The ability to deduct up to $300 in charitable donations without itemizing deductions has expired and will not be available on your 2022 returns.
The IRS has also announced how it will treat the income and property tax rebates that were paid out last fall by the state of Illinois. The payments will not be treated as taxable income. You also will not be required to deduct the property tax rebate from the amount of property tax you paid when claiming the Illinois credit for property tax on your primary residence.
It’s important for taxpayers to be aware of these changes as they prepare for the 2023 tax year. Understanding the gift tax exemption and business mileage rate can help individuals and families plan their finances and minimize their tax liability.