Estate Planning News

Estate Planning Update: 2022 Figures

2022 is on the horizon, and with that, some updates are in order on what we know so far. The caveat remains: Congress is unpredictable, especially this time of year. We may find out this month about some further changes in tax laws. We’ll keep an eye out and update you accordingly.

  • Federal Estate & Gift Tax Exemption: If Congress does not act to change the federal estate and gift tax exemption, then in 2022, the exemption is $12.06 Million per person. 40% is the highest tax rate for estates. The law “sunsets” at the end of 2025 if Congress has not acted by then, in which case, the estate tax exemption decreases to $5 Million per person.
  • PA Inheritance Taxes: These rates have not changed, and are not connected to the federal estate tax exemption. There is no exemption in Pennsylvania, except for a couple of instances like life insurance proceeds. Rates are 0% for spouses/charities, 4.5% for kids, 12% for siblings and 15% for everyone else. 
  • Annual Gift Exclusion: In 2022, you can now gift $16,000 per person, per year, without touching your lifetime estate and gift tax exemption above. $15,000 has been the number for a few years now, so it’s a welcome change.
  • Social Security: Cost of living (COLA) has risen, thus Social Security benefits will rise 5.9% in 2022.
  • Federal Income Tax Brackets: These will change slightly for the better in 2022. For more detailed information, click here.
  • Medicaid Changes: In 2022, the limits have increased for what a healthy spouse can keep. First, the maximum resource allowance (besides primary residence, car, etc) will be $137,400. Maximum spousal income will be $3,435. Medicaid planning can, of course, help preserve more than the minimum amounts here.

It’s important to keep your estate plan current, and always be on the lookout for new planning ideas and techniques based on changes that may occur for you and your family. To make an appointment with Jeremy, contact us today.