What is the annual exclusion limit per recipient for gifts in 2023?

In 2023, the annual exclusion limit per recipient for gifts is set at $17,000. This amount refers to the maximum value that an individual can gift to another person in a year without incurring any gift tax liability or requiring the filing of a gift tax return. The annual exclusion allows individuals to make gifts that fall within this limit tax-free, which helps encourage wealth transfer and gifting without the penalties of taxation.

The annual exclusion amount is adjusted periodically for inflation, which is why it has changed over the years. Understanding this limit is crucial for effective financial and estate planning, as it helps individuals manage their gifting strategies while minimizing potential tax impacts. This figure is important for both donors and recipients, as it creates a clear boundary for tax-free gifting, thus enabling more accessible financial support without adverse tax consequences.