2022 Federal Gift And Estate Tax Update

While there has been much speculation surrounding changes to federal gift and estate tax law, such legislation has not yet passed through both houses of Congress. Though subject to change if legislation eventually passes through the Senate, the below items highlight the landscape of federal gift and estate tax law as of January 1, 2022:

• The lifetime exclusion amount for federal gift and estate taxes increases to $12,060,000 per person, or $24,120,000 for a married couple. These amounts are set to decrease on January 1, 2026, unless new legislation is enacted.

• The federal lifetime exclusion amount remains “portable,” meaning an individual’s unused exclusion amount transfers to his or her surviving spouse with the proper election on the decedent’s estate tax return.

• The annual federal gift exclusion amount increases to $16,000 per person, or $32,000 for a married couple.

• The step-up in basis (valuing property received from a decedent at fair market value as of the date of the decedent’s death) remains in effect for 2022 as proposals to eliminate the stepped-up basis were not passed by Congress.

The Build Back Better Act that passed through the House of Representatives in November of 2021 does include some adjustments to current federal gift and estate tax law. If the Act passes through the Senate this year, we may see changes to the above and other aspects of federal gift and estate tax law. See this piece from JD Supra for more extensive discussion of current federal gift and estate tax law.