It's that time of year again! The start of 2022 has brought us an increase in exemption amounts for estate, gift, and generation-skipping transfer (GST) taxes. Each year, the Internal Revenue Service adjusts tax rates to provide for annual cost-of-living increases.
The original IRS release of the 2022 numbers can be found at https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2022.
Below is a summary of the numbers.
Gift tax: This year, the lifetime gift tax exemption amount increased from $11.7 million to $12.06 million. While this year's exemption amount increased as in years past, that number is set to be likely cut half in 2026. The top marginal rate remains 40 percent. For the past four years, the annual gift tax exclusion amount remained at $15,000, but it has increased this year to $16,000. Annual exclusion gifts for non-citizen spouses have increased to $164,000, up from $159,000.
GST tax: The GST tax exemption amount, which can be applied to generation-skipping transfers (including those in trust) during 2022, is now $12.06 million, which was increased from $11.7 million. The rate remains unchanged at 40 percent.
Income tax: The tax rate schedule for estates and trusts in 2022 is as follows:
|
If the taxable income is: |
The tax is: |
|
Not over $2,750 |
10 percent of taxable income |
|
Over $2,750 but not over $9,850 |
$275 plus 24% of the excess over $2,750 |
|
Over $9,850 but not over $13,450 |
$1,979 plus 35% of the excess over $9,850 |
|
Over $13,450 |
$3,239 plus 37% of the excess over $13,450 |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.