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.