With the release of the Chained Consumer Price Index (C-CPI-U) for August 2021, it’s possible to calculate various inflation adjustments for 2022. The following are the significant federal estate planning numbers, with the numbers for 2021 shown in parentheses:
- The base applicable exclusion amount (and generation-skipping tax exemption) will be $12,060,000 (was $11,700,000 for 2021).
- The annual gift tax exclusion will be $16,000 (had been $15,000 since 2018).
- The annual gift tax exclusion for a non-citizen spouse will be $164,000 (was $159,000).
- The “2 percent” amount for purposes of section 6166 will be $1,640,000 (was $1,590,000).
- The limitation on the special use valuation reduction under section 2032A will be $1,230,000 (was $1,190,000).
- The top (37%) income tax bracket for estates and trusts will begin at $13,450 (was $13,050).
- The alternative minimum tax exemption for estates and trusts will be 26,500 (was $25,700), and the phaseout of the exemption will start at $88,300 (was $85,650).
The Internal Revenue Service will publish the official inflation adjustments in a Revenue Procedure that will probably appear in 4-8 weeks.