New Higher Estate And Gift Tax Limits For 2022

The annual estate and gift tax exemption in 2022 is $12.06 million per individual, representing an increase due to inflation from the 2021 exemption of $11.7 million. This means that a married couple can now pass on to others during lifetime or at death a total of $24.12 million without incurring gift or estate tax. For an individual that already maxed out their lifetime gifts in 2021, they can now gift another $360,000 this year, or a couple can give away another $720,000.

Keep in mind that absent any legislative action, current laws provide that the estate and gift tax exemption amount will be significantly reduced after December 31, 2025, when the exemption amount is set to revert back to $5 million indexed for inflation. An earlier version of the Build Back Better Act included provisions that would have reduced the exemption amount beginning in 2023, but that is not a part of the present legislation pending at the time of this writing.

The annual gift tax exclusion amount also increased in 2022 to $16,000 per year, representing an increase from $15,000, which is the amount that it had been for several years. This means that a married couple can now gift up to $32,000 per recipient this year without incurring gift tax, thereby removing the assets from the donor’s taxable estates and allow the assets to appreciate in the recipient’s estate.

Please contact us if you wish to schedule a consultation to discuss the impact of any of these changes on your estate plan.