Changes to 2022 Federal Transfer Tax Exemptions

1 min

Despite the various proposals to lower federal transfer tax exemptions and increase the tax rates, none of them were actually enacted in 2021. As a result, the estate, gift, and GST tax exemptions have instead increased for inflation in 2022, giving people a second chance on locking in the advantageous rates and exemptions before they revert to $5 million in 2026 (adjusted for inflation and assuming the tax law does not change before then).

The following chart shows the current transfer tax exemptions in comparison to last year:

 

2021

2022

Estate Tax Exemption

$11,700,000

$12,060,000

GST Tax Exemption

$11,700,000

$12,060,000

Lifetime Gift Tax Exemption

$11,700,000

$12,060,000

Annual Gift Tax Exclusion

$15,000

$16,000

We highly recommend you consider making additional lifetime gifts to utilize the increased 2022 exemptions. Assuming you used all of your $11.7 million exemption, you can gift an additional $360,000 ($720,000 for married couples) tax free in 2022.

If you are interested in making a gift this year, please contact us to discuss your options and review your estate plan.