Gift Tax Exemption

Every taxpayer can take advantage of the $13,000 gift tax exclusion, every year! And a taxpayer may make as many gifts as long as no one person receives no more than $13,000 of value in any one year.

Married couples may give $26,000 to each recipient; if they make a special election, the entire $26,000 can come from one partner’s property. The annual exclusion doesn’t count against the $5 million lifetime exemption, and there is no deduction for the gift. Although many states have estate or inheritance taxes, only two states have gift taxes: Connecticut and Tennessee.

The recipient may be anyone—not just a relative—and the gift may be either cash or a non-cash item such stock or other property. Gifts don’t have to be made outright to an individual either; they may be made to a trust instead.