The annual gift tax exclusion will increase from $12,000 to $13,000 effective January 1, 2009, the Internal Revenue Service (IRS) has announced. The gift tax exclusion is the amount the IRS allows a taxpayer to gift to another individual without reporting the gift.

The increase means that more can be given away for estate tax planning purposes. For example, a married couple with four children will be able to give away up to $104,000 in 2009 with no gift tax implications.

The tax code permits the gift tax exclusion, which has remained at $12,000 since 2006, to rise when inflation would produce an increase of $1,000 or more. This year’s inflation figures pushed the amount above the next $1,000 threshold.