Currently, in 2023, if a NY estate is less than $6,580,000, there is no estate tax. New York does not have gift tax, but will “claw back”, or include, any gifts made within three years of date of death when calculating the value of the estate for estate tax purposes. If an estate is more than 3% over that exemption amount (more than $6.9MM), the exemption is lost and the entire estate is taxed from dollar 1 (sliding scale up to 16%). There are strategies to reduce or even eliminate this tax with proper advance planning.
Currently, the Federal gift and estate tax exemption amount is $12.92 million per person. Tax is calculated on the amount the decedent had a death PLUS gifts made by the decedent during lifetime that were above the annual exclusion amount. In 2023, the annual gift tax exclusion amount is $17,000. That means that the first $17,000 gifted to an individual is not counted towards lifetime gift amount, but anything above that gifted to the individual would be added to the lifetime amount). The Federal Tax rate is 40%, which is assessed on the portion of the estate that is above the estate and gift exemption amount. The Federal exemption amount is slated to be reduced significantly in 2026.