On January 1, 2009, the gift tax annual exclusion amount increased from $12,000 to $13,000. This means that an individual may give $13,000 (and a married couple electing to gift-split may give $26,000) to any person in 2009 without any gift tax consequences. This also means that a single donor may then transfer up to $65,000, and a married couple may then transfer up to $130,000, to each new Section 529 Plan.
In addition to the increase in the gift tax annual exclusion, the Federal estate tax applicable exemption amount increased in 2009. This is the amount that an individual can pass at his or her death free of Federal estate tax. As of January 1, 2009, the Federal estate tax exemption amount is $3,500,000. (Please note that the donor’s lifetime gift tax exemption amount remains at $1,000,000. Moreover, the estate tax exemption available at an individual’s death is reduced by the portion of the $1,000,000 gift tax exemption the individual used during his or her lifetime.)