IRS Increases Annual Exclusion for Gifts for Calendar Year 2022

The IRS recently released Revenue Procedure 2021-45 announcing the tax year 2022 annual inflation adjustments. Procedure 2021-45 details more than 60 tax provisions, including the tax rate schedules and other tax changes. One of the provisions includes an increase to the annual exclusion from gift tax. For calendar year 2022, the first $16,000 of gifts to any person (other than gifts or future interests of property) are not included in the total amount of taxable gifts under § 2503 made during that year. Additionally, the first $164,000 of gifts to a spouse who is not a citizen of the United States (other than gifts or future interests of property) are not included in the total amount of taxable gifts under §§ 2503 and 2523(i)(2) made during that year.

The federal lifetime gift tax exemption will also see an increase in the new year, jumping from $11,700,0000 to $12,060,000 beginning January 1, 2022. This is also the estate tax exemption for decedents who die in 2022 as the gift and estate tax are unified.

To review more highlights from Procedure 2021-45, visit the IRS Newsroom.