Every year, the IRS adjusts several tax numbers to reflect inflation. Inflation is now surging. It hit a 31-year high in October. As a result, the IRS increased the annual gift tax exclusion from $15,000 to $16,000 for 2022. This is the first increase to the annual gift tax exclusion since 2018.
The IRS also raised the federal estate tax exclusion from $11,700,000 in 2021 to $12,060,000 in 2022.
Further, the IRS increased the amount individuals can contribute to their 401(k) plans in 2022 to $20,500, up from $19,500 for 2020 and 2021.
- IRS, IR-2021-219: IRS provides tax inflation adjustments for tax year 2022, Nov. 10, 2021.
- IRS, Rev. Proc. 2021-45.
- IRS, IR-2021-216: IRS announces 401(k) limit increases to $20,500, Nov. 4, 2021.
- Andrew Keshner, IRS releases new standard deductions and tax brackets as inflation soars, MarketWatch, Nov. 10, 2021.
- Jeff Cox, U.S. consumer prices jump 6.2% in October, the biggest inflation surge in more than 30 years, CNBC, Nov. 10, 2021 (“Inflation across a broad swath of products that consumers buy every day was even worse than expected in October, hitting its highest point in more than 30 years, the Labor Department reported Wednesday.”).