As we start the new year, this Federal Tax Update highlights estate planning-related federal tax information that may be helpful as you consider planning options for 2022. Because Congress could pass legislation that changes this information during the year, you should contact your estate planning attorney for advice prior to taking any transfer tax planning action.
Key Tax Concepts for 2022
Update on Build Back Better Act
The House of Representatives passed the Build Back Better Act on November 19, 2021. As of the date of this Federal Tax Update, the Senate has not yet voted on the Act. The House-passed version of the Act does not change the top 37% federal income tax rate on ordinary income, change the top 20% federal income tax rate on long-term capital gains or qualified dividends, change the top 40% federal transfer tax rate, change the federal transfer tax exclusion amounts, or adversely affect the use of grantor trusts for estate planning purposes. However, the House-passed version of the Act, if enacted into law, would impose a new 5% additional federal income tax on modified adjusted gross income in excess of $10 million for unmarried individuals and for married individuals filing jointly or on modified adjusted gross income in excess of $200,000 for estates and non-grantor trusts. And, if enacted, another 3% federal income tax (after applying the 5% additional tax) would be imposed on modified adjusted gross income in excess of $25 million for unmarried individuals and for married individuals filing jointly or to modified adjusted gross income in excess of $500,000 for estates and non-grantor trusts. A variety of other federal tax law changes are also included in the House-passed version of the Act. Because Congress continues to negotiate the legislation, important federal tax laws could change at any time in 2022. Accordingly, you should contact your Lathrop GPM estate planning attorney for advice prior to taking any transfer tax planning action.
Contact Your Estate Planning Attorney for More Information
In light of the above, estate planning and business succession planning opportunities are available in 2022, and you may wish to have your current estate plan reviewed to ensure that your documents continue to achieve your tax and non-tax planning goals. Please contact your estate planning attorney to ensure that your estate plan continues to reflect your intentions and to ask whether any estate planning opportunities are appropriate for you to consider.