Annual Gift Tax Exclusion

Annual Gift Tax Exclusion refers to the maximum amount an individual can gift to another person in a single year without incurring federal gift tax or needing to file a gift tax return.

As of 2023, the exclusion amount is set at $17,000 per recipient. This means that an individual can give $17,000 to as many people as they want within a year without triggering any gift tax implications. For example, if a grandparent gifts $17,000 to each of their three grandchildren, they can do so without any tax consequences. If the amount exceeds the annual exclusion limit, the excess amount counts against the donor’s lifetime gift tax exemption, which is much higher and allows for larger gifts to be made over a person’s lifetime before any taxes are owed.