The estate (and gift) tax exemption amount (exemption amount) is the total amount that an individual may transfer during life, or at death, without incurring gift or estate tax on the value of the gifted assets. This amount is adjusted annually for inflation, meaning that even if you exhaust your exemption amount by making substantial gifts in the current year, on Jan. 1, 2017, the inflation adjustment on the base $5 million exemption amount will become available for future gifting.
In 2017, the exemption amount will increase from $5,450,000 to $5,490,000 per individual (or $10,980,000 for a married couple).
The annual exclusion amount is $14,000 per gift recipient in 2016, and will remain constant in 2017. Gifts to any recipient may be doubled if gifts are split with a spouse. Unlike the exemption amount, the annual gift tax exclusion amount is a “use it or lose it” tax benefit. You may make annual exclusion gifts to as many recipients in a year as you wish, but you may not carry the annual exclusion amount forward to the next year.
For further details on 2017 tax benefits please see IRS Revenue Procedure 2016-55.