New Higher Estate And Gift Tax Limits For 2022: Couples Can Pass On $720,000 More Tax Free

The official estate and gift tax exemption climbs to $12.06 million per individual for 2022 deaths, up from $11.7 million in 2021, according to new Internal Revenue Service inflation-adjusted numbers. And the gift tax annual exclusion amount jumps to $16,000 for 2022, up from $15,000 where it’s been stuck since 2018. 

The new numbers essentially mean that wealthy taxpayers can transfer more to their heirs tax free during life—or at death. A lot more. 

The IRS announced the new inflation-adjusted numbers in Rev. Proc. 2021-45. We have all the details on 2022 tax brackets, standard deduction amounts and more—including for trusts & estates. We also have the news on 2022 retirement account limits, including the higher $61,000 overall 401(k) contribution limit, too.

The estate tax is assessed at 40% on the biggest estates. By transferring wealth to heirs early, the rich can avoid the estate tax. They do so by making big gifts—typically in the millions that eat up the $12 million exemption amount—and by making lots of $16,000 annual exclusion gifts that don’t count against the $12 million.