What effect does gift splitting have on donor's tax liability?

Gift splitting is a provision that allows a married couple to combine their individual gift tax exclusions when making gifts. By treating one spouse's gift as if it were made by both spouses, they can effectively double the annual exclusion amount that applies to gifts made to a recipient. For example, as of 2023, the annual exclusion amount per individual is $17,000. With gift splitting, a couple can gift up to $34,000 to each recipient without incurring any gift tax or affecting their lifetime gift tax exemption. This not only maximizes the amount that can be gifted without tax implications but also strategically aids in wealth transfer planning for a couple. Thus, the correct option recognizes the benefit of gift splitting in increasing the exclusion amounts available to couples.