CLIENT ALERT — IRS Releases 2022 Gift and Estate Tax Exemptions

Regular readers of our e-newsletter know that, following a tempestuous fall, the federal estate tax seems to be settled for the time being.

The IRS recently announced updates to the annual “exclusions” for estate tax and gifting for 2022.

The estate tax exclusion is the amount that can pass tax-free to a non-spouse upon your death, less gifts made during your life. For 2022, the federal estate tax exclusion will increase from $11,700,000.00 to $12,060,000.00, to reflect inflation.  A married individual has an unlimited exclusion to a surviving spouse and, under certain conditions, upon the surviving spouse’s death, he/she can combine his/her exclusion with whatever exclusion remains from his/her predeceased spouse (called “portability”).

The gift exclusion is the amount that you can gift annually without the gift reducing your lifetime estate tax exclusion.

For 2022, the federal gift tax exclusion will increase from $15,000.00 to $16,000.00.  This means that each individual can gift up to $16,000.00 to as many recipients as he/she would like without the gift reducing their lifetime estate tax exclusion (and without filing a gift tax return).  Many couples utilize their annual gift exclusion amount to make yearly tax-free gifts to children and grandchildren (or to 529 plans).

Maryland and DC residents should bear in mind that, although the federal estate tax exclusion is extraordinarily high, each Maryland and the District of Columbia assess state estate tax.

Maryland’s estate tax exclusion remains $5,000,000.00.  Under certain circumstances, a surviving spouse can “port” their deceased spouse’s unused exemption to increase their exemption to up to $10,000,000.00.

The District of Columbia estate tax exclusion remains $4,000,000.00, without the ability to port a deceased spouse’s unused exemption.  The reduced amount, combined with the lack of portability, makes the District of Columbia one of the most aggressive jurisdictions in the country when it comes to estate tax.

If you’d like to chat about your estate plan, please contact Jeremy Rachlin at or (301) 656-1177, or jrachlin@bulmandunie.com to schedule a discussion.