4.13  Annual Gift Tax Exclusion and Lifetime Gift Tax Exclusion

Gifts made from individuals to other individuals are subject to taxation (which is paid by the giver, not the receiver, of the gift). The giver is allowed an annual gift tax exclusion that permits the giver to give anyone up to $16,000 per year, tax free. For a married couple filing jointly, the annual gift tax exclusion is $32,000.

An individual is also allowed to give a certain amount to other individuals tax-free over the course of their lives. This is called the lifetime gift tax exclusion. For 2022, the lifetime gift tax exclusion is $12.06 million. This exclusion becomes important at death because the lifetime exclusion allows people to pass on up to $12.06 million to their heirs tax-free. Inherited asset