In 2024, the gift tax annual “sprinkling” exclusion amount will increase to $18,000 per donee (from its prior $17,000 amount in 2023).  This gift tax annual exclusion amount can be used without using the estate and gift tax exemption amount.  This means that a married couple can now gift together $36,000 to each of their children and grandchildren without using any of their combined $27,220,000 unified exemption amount.  Additionally, clients can make tax-free gifts in unlimited amounts for tuition, medical expenses, and health insurance premiums paid directly to the school and/or medical provider.  With the expected high inflation adjustments, this $18,000 gift tax annual exclusion amount will likely continue to increase in the future.  

EXAMPLE:  Two spouses have three (3) children and seven (7) grandchildren for a total of ten (10) potential donees to whom to make annual gifts.  With the increased gift tax annual exclusion to $18,000 in 2024, the parents can gift to their ten potential donees a total of $360,000 every year gift tax-free. [Above this amount, they would have to file a gift tax return].