What is the limit for annual gifts under the gift tax exclusion?

The limit for annual gifts under the gift tax exclusion is $15,000 per recipient per year. This exclusion allows individuals to give gifts without incurring gift tax or needing to file a gift tax return. The limit is set to provide a level of financial flexibility, enabling individuals to support family and friends without the burden of tax implications on modest gifts.

The annual exclusion amount is periodically adjusted for inflation, and it has important implications for estate planning and wealth transfer strategies. By utilizing the exclusion, donors can effectively transfer wealth while minimizing tax liability, which is especially beneficial when engaging in intergenerational wealth transfer.

Understanding this limit is crucial for individuals who want to make gifts strategically without triggering additional tax consequences, ensuring they are aware of the regulatory framework that governs gift giving in the United States.