The Internal Revenue Service has released Rev. Proc. 2021-45 with inflation adjustments for 2022 and, consistent with earlier predictions, the changes in the most significant federal estate and trust planning numbers will be as follows:
- 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 capital gains tax zero rate amount is $2,800 for an estate or trust (was $2,700) and the maximum 15 percent rate amount is $13,700 (was $13,250).
- 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) and the phaseout be complete at $194,300 (was $188,450). The excess taxable income above which the 28 percent rate applies will be $206,100 (was $199,900).