Explore commonly used personal finance terms.
The annual gift tax exclusion is the maximum amount a person can gift to another individual each year without incurring a federal gift tax. This exclusion allows individuals to transfer wealth tax-efficiently, supporting estate planning and wealth distribution. Amounts over the exclusion limit may be subject to gift taxes, impacting the estate value. For individuals seeking to minimize estate taxes, the annual gift tax exclusion is a strategic tool for transferring wealth gradually over time.
