Individuals are allowed to give up to $10,000 each year (married couples can give up to $20,000) to as many recipients as they choose.

The first $12,000 that a taxpayer gives to another individual each year is excluded from gift tax. For example, a couple with 2 children can give $48,000 to their children each year without making a taxable gift, since there are 2 donors and 2 recipients: 2 x 2 x $12,000 = $48,000.

Every person is permitted to give away up to $10,000 per year (under 2001 law) to any other person without incurring any gift tax liability. There is no limit on the number of people who can receive these gifts in a year. To qualify for this exclusion, the gift must be a gift of a present interest, meaning that the recipient can enjoy the gift immediately and the donor must not have any control over the asset after it is given away. This can present problems when gifts are made to trusts. This exclusion can be doubled to $20,000 per person, per year, if the donors are married and both spouses consent to join in making the gift. This is called gift splitting. The $10,000 per year amount is indexed for inflation.