What is the annual gift tax exclusion amount in 2023?

The annual gift tax exclusion amount for 2023 is indeed $17,000. This is the maximum amount an individual can give to another individual in a calendar year without incurring gift tax or having to file a gift tax return. This exclusion allows individuals to transfer wealth during their lifetime without affecting their lifetime gift and estate tax exemption limits. By increasing the exclusion amount, the IRS has acknowledged inflationary pressures, making it easier for people to gift money without tax implications.

The figures for the annual exclusion are typically adjusted for inflation periodically, and the increase from the previous year's limit reflects the government's effort to keep pace with changes in the economy. Understanding this exclusion is important for estate planning and financial gifts, as it enables individuals to provide support to their family and friends without triggering potential tax consequences.