Gift tax and other exclusions increases for 2022

Your Guide to State, Local, Federal, Estate + International Taxation

Every year, many transfer tax and foreign item figures are adjusted to reflect increases in cost-of-living expenses, following the average Consumer Price Index. The IRS has recently announced gift tax and other exclusions increases updated for inflation for 2022.

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Gift Tax Annual Exclusion: Adjusted up to $16,000 for gifts made in 2022. This is a $1,000 increase from the 2021 exclusion of $15,000.

Unified Estate and Gift Tax Exclusion, also known as the “lifetime exemption”. For 2022, the total lifetime gifts made or transfers on death will have a $12,060,000 exclusion amount. This is a $360,000 increase from the 2021 amount of $11,700,000.

Generation-Skipping Transfer Tax Exemption: This amount mirrors the Unified Exclusion, also with an increase to $12,060,000 in 2022.

Annual Exclusion for Gifts to Noncitizen Spouses: Gifts made to noncitizen spouses in 2022 have an exclusion amount of $164,000, an increase of $5,000 from 2021.

Foreign Gift Reporting: Reporting is required if aggregate foreign gifts from a nonresident alien or individual estate and from foreign partnerships or corporations exceeds a certain amount during the given tax year. For gifts from nonresident aliens or individual estates, this amount is $100,000. For foreign partnerships or corporations, the amount in 2022 is $17,339, compared to the 2021 amount of $16,815.

Foreign Earned Income Exclusion: The foreign earned income exclusion will increase to $112,000 in 2022, for comparison this figure in 2021 was $108,700.

Expatriation: For 2022, an individual is a covered expatriate if their average annual net income tax for the five tax years ending before the date of the loss of U.S. citizenship is more than $178,000, an increase of $6,000 from 2021.

This information is general in nature and should not be relied upon. If you have specific questions regarding these gift tax and other exclusions increases, please contact your Henry+Horne advisor.

Haley M. Braun, CPA