How the Exclusion Works
The exclusion applies per recipient, per year. You can give $19,000 to as many different people as you want without any tax consequences. Only gifts that exceed the annual exclusion count against your lifetime estate and gift tax exemption.
Strategic Gifting in Estate Planning
Annual gifting can reduce the size of your taxable estate over time. By consistently giving within the exclusion amount, you transfer wealth to the next generation without using any of your lifetime exemption. This strategy is especially valuable for families whose estates may approach or exceed the federal estate tax exemption.
What Counts as a Gift
Cash, property, investments, and even forgiving a loan all count as gifts. However, paying someone's tuition directly to their school or paying medical bills directly to the provider does not count against the exclusion. These payments are excluded separately under federal tax law. Arizona does not impose a state gift tax or estate tax, so only the federal rules apply to Arizona families.
For the complete picture of annual exclusion gifts, the lifetime exemption, and the federal estate, gift, and GST tax planning workflow, read our pillar guide: Estate, Gift & GST Tax in Arizona: The Complete Guide.