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02.23.18

The 2018 gift tax annual exclusion is $15,000 per donee

The gift tax annual exclusion allows an individual to make gifts without reducing the donor’s lifetime gift tax exemption amount. The exclusion is capped, and gifts must take immediate effect to be eligible.

What is the annual gift tax exclusion amount for 2018?

The gift tax annual exclusion amount is determined by the Internal Revenue Service on an annual basis. The IRS has confirmed that the gift tax annual exclusion in 2018 is $15,000 per donee.

How has the annual gift tax exclusion amount changed over the years?

Since 1997, the gift tax annual exclusion amount is subject to an inflation adjustment that takes effect only when the adjustment equates to a $1,000 incremental change in the gift tax annual exclusion. The $1,000 incremental change to the gift tax exclusion amount, per donee, occurred as follows:

                              1997–2001: $10,000
                              2002–2005: $11,000
                              2006–2008: $12,000
                              2009–2012: $13,000
                              2013–2017: $14,000
                              2018:  $15,000

What is the lifetime exclusion amount in 2018?

With enactment of The Tax Cut and Jobs Act in December 2017, the basic exclusion amount for these transfer taxes is now $10,000,000 per taxpayer. The Internal Revenue Service has not yet confirmed the 2018 inflation adjustment for the estate, gift and generation-skipping transfer tax lifetime exemption amount.

What payments are excluded from the annual and lifetime gift tax exemption?

A donor may exclude from his annual and lifetime gift tax exemption all gifts to his/her spouse as long as the spouse is a U.S. citizen, payments of tuition made directly to the donee’s educational institution and payments for medical expenses (including medical insurance) paid directly to the donee’s medical or medical insurance provider.