The Internal Revenue Service has announced that the annual gift tax exclusion is increasing next year due to inflation. After four years of being at $15,000, the exclusion will be $16,000 per recipient for 2022—the highest exclusion amount ever. Further, the annual amount that one may give to a spouse who is not a US citizen will increase to $164,000 in 2022.
Note: Although the IRS has announced that the lifetime estate and gift tax exemption will increase to $12.06 million in 2022, that amount is set to be cut in half at the start of 2026. An earlier version of the Build Back Better Act included a provision that would have cut the exemption in half at the start of 2023 instead, but that was dropped from the November 3 legislative text. It is unclear whether that provision will work its way back into any final legislation. Thus, if one is interested in using his or her higher lifetime gift tax exemption, he or she may want to act fast before any changes to the law are implemented.
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Kathy Brown van Zutphen is an attorney licensed to practice law in Alabama and Mississippi. She focuses on the “elder law” areas of trusts, estates, and conservatorships. Additionally, she litigates lawsuits and represents small business owners as part of her legal practice. You can also reach her at her office: (228) 357-5227.
