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The federal gift tax rates range from 18% to 40%, so staying below the exclusion limit can save you money.
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The gift tax exclusion applies to both cash gifts and non-cash gifts, such as real estate, cars, and stocks.
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The amount of the gift for gift tax purposes is based on the property's fair market value at the time of the gift.
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The annual gift tax exclusion for 2023 is $17,000 per person, and it is adjusted for inflation each year.
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If you're married, your spouse can also give up to $17,000 to the same individuals, doubling the tax-free limit.
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Certain gifts, such as those to spouses, charitable organizations, and educational institutions, may be exempt from the gift tax.
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It's recommended to consult a tax professional before making significant gifts to understand if any exemptions apply.
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Exceeding the annual gift tax exclusion may require filing a gift tax return (Form 709), but you may not owe any tax due to the lifetime gift tax exclusion.
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The lifetime gift tax limit for 2023 is $12.92 million, and it's doubled for married couples. Most people don't reach this limit and don't have to pay gift tax.
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