Annual Gift Tax and Estate Tax Exclusions to Increase in 2022
With the new year comes some changes to tax rules. First, the annual gift tax exclusion – the amount you can gift to any one person without filing a gift tax return – is increasing from $15,000 to $16,000 in 2022. This is the first increase since 2018. Anyone who gives away more than $16,000 to any one person must file form 709 – gift tax return.
Additionally, the federal estate tax exclusion is increasing from $11.7 million for individuals ($23.4 million per couple) to $12.06 million for individuals ($24.12 million for individuals) for people who die during the 2022 calendar year. This increase also means that the lifetime gift tax exclusion will increase to $12.06 million along with the generation-skipping tax exemption.
The lifetime gift tax exclusion means that even if you must file a Form 709 (gift tax return), you will be only taxed if you have given away more than $12.06 million in your lifetime.
Although these rates have increased dramatically in recent years, many people expect Congress to change the exclusion limit. Currently, the lifetime gift tax exclusion is scheduled to decrease by half in 2026.
For further information on these changes, you can visit https://www.irs.gov/pub/irs-drop/rp-21-45.pdf.
Hook Law Center: Jolene, what can you tell us about touching adoption story of Sergeant Pepper the cat?
Jolene: This is such a heartwarming story. A little girl, Ivy, recently adopted a cat named Sergeant Pepper. Both Sergeant Pepper and her owner were born with a cleft lip and palate. Since they found each other, the little girl and her cat have become very close. Their story won a Love Stories award through Petco Love, an organization that invites the parents of rescue pets to submit stories about how their pets have changed their lives. The winner receives a grant for the animal charity of their choice. The story of Ivy and Sergeant Pepper earned a grant for the Philadelphia Animal Welfare Society.