Estate Taxes are one of the taxes covered by the IRS’s unified transfer tax system. These are designed to collect taxes from transferring property at death. On the other hand, a gift tax is a federal tax paid by an individual who transfers something of value to another individual without receiving something of similar value in return.
The IRS also announced the annual inflation adjustment for the federal gift, estate, and generation-skipping transfer (GST) tax exemption, which increases the amount sheltered from taxes from $11,700,000 for 2021 to $12,060,000 as of January 1, 2022.
Under current rules, few taxpayers are subject to estate and gift taxes given the doubling of the Unified Tax Credit (UTC) by the Tax Cuts and Jobs Act of 2017. But the UTC is due to return to the pre-2017 figures adjusted for inflation in 2026. In addition, there is sentiment by the president and Congress to reduce the UTC even further. Hence, tax planning before 2026 may be something to consider at this time.
This Tax webinar highlights the federal tax issues associated with Estate, Gift, and Generation-Skipping Transfer Taxes.
