Happy New Year!

Happy New Year! I wish you all health and happiness in 2022.

We ended 2021 with many of us watching the progress on the infrastructure bill and the proposed changes to the tax code; but it now appears that negotiations will be tabled for the foreseeable future.

While we do not expect any large changes to the tax code, 2022 does bring some new scheduled increases to existing estate and gift credits and exemptions. Specifically, the IRS announced new higher estate and gift tax limits for 2022 due to inflation. The estate and gift tax exemption has increased from $11.7 million in 2021 to $12.06 million for individuals ($24.12 million for couples) in 2022. The new higher exemption allows for those who previously maxed out lifetime gifts to give away additional lifetime gifts of $360,000 ($720,000 for couples) in 2022.

Additionally, the annual gift tax exclusion is now $16,000 for individuals ($32,000 for couples) in 2022, an increase from $15,000 in 2021 and the first increase in four years. The annual gift tax exclusion allows you to make up to a $16,000 gift to any number of recipients without gift tax or the need for a gift tax return.

There are many clever ways to leverage the gift tax annual exclusion to strategically transfer assets to your children and grandchildren. Please let me know if you are curious about this simple and effective planning technique.

On a lighter note, I’ve had many conversations recently about how strange it feels to start 2022 with some of the same stresses we felt in 2020. I thought this McSweeney’s essay on time captured the feeling in a funny way.