Estate tax attorneys were waiting with bated breath in 2021 as Congress ping-ponged back and forth with different tax proposals. In spring, Bernie Sanders introduced the “For the 99.5% Act,” which sought to reduce the estate tax exemption from $11.7 million to $3.5 million. In the fall, the Biden Administration introduced the Build Back Better Act, which seemingly jump-started Congress’ efforts to overhaul tax legislation. The BBB Act not only sought to reduce the estate tax exemption but to essentially make unenforceable many widely used estate planning strategies.

The House Ways and Means Committee proposed the new legislation on September 13 with a 50% reduction of the estate and gift tax exclusion amount and an essential elimination of the use of irrevocable trusts. That proposal wasn’t able to gain much traction. On October 28, a scaled-down version of the previously aggressive proposal was introduced (then superseded by a November 3 version).

Then, on December 19, 2021, Senator Joe Manchin (D-W. Va.) killed any hopes of progress for the Build Back Better Act when he stated that he “cannot vote to move forward on this mammoth piece of legislation.”

It is still uncertain what is in store for the transfer tax exemptions, but as of now, the 2022 exemptions were simply increased for inflation. They are as follows:

Unified lifetime gift and estate tax exemption is $12,060,000. Transfers above the exemption will be taxed at 40%. Annual gift tax exclusion is $16,000. Any gifts made in excess of $16,000 will require a gift tax return in the year the gift was made. GST (generation-skipping transfer) tax exemption is $12,060,000. Transfer above the exemption will be taxed at 40%.