Following our September posting of a preview of the 2022 estate tax exemptions, the IRS recently released the inflation-adjusted amounts that will apply in 2022.
Federal Estate Tax Exemption
As of January 1, 2022, the federal lifetime gift, estate, and GST estate tax exemption amount will increase to $12.06 million, up from $11.70 million in 2021. This means that a married couple will have $24.12 million of available exemption, up from $23.4 million in 2021. High net worth individuals who have already used up their entire exemptions may wish to consider making additional gifts in 2022 to take advantage of the inflation-adjusted amount. Under current law, the top marginal federal estate tax rate remains at 40%.
Annual Exclusion for Gift
The annual exclusion amount for gifts in 2022 will increase to $16,000. There has not been a change in the annual exclusion since the amount increased from $14,000 in 2017 to $15,000 in 2018. This means that an individual can gift up to $16,000 ($32,000 for a married couple) to any person without incurring a gift tax or having to file a gift tax return (IRS Form 709). Any gift in excess of $16,000 will reduce the federal exemption available at the time of death.
Minnesota Estate Tax
As of January 1, 2022, the Minnesota estate tax exemption amount will remain at $3.0 million. Minnesota uses a graduated scale to assess an estate’s tax liability and its current estate tax rates range from 13% to 16%. The Minnesota estate tax exemption amount has not changed since the amount increased to $3.0 million in 2020.
Next Steps?
Please contact FMJ’s Trusts & Estates attorneys at estateplanning@fmjlaw.com if you have any questions about the 2022 estate tax exemptions or if you have any other estate planning questions that you would like to discuss.
Related Attorneys
