Are Husband-Wife Gifts subject to Gift Tax?
Generally speaking, gifts made to spouses are a tax free transaction. The Annual Gift Tax Exclusion amount of $12,000 for Tax Year 2007 does apply not to Husband-Wife.
There is nontheless an exception, in that the receipient spouse must be a US citizen! There is a different rule that applies to a Non-US Citizen spouse that is a receipient of the Gift. The IRS has determined that for calendar year 2007, "the first $125,000 of gifts to a spouse who is not a citizen of the United States (other than gifts of future interests in property) are not included in the total amount of taxable gifts made during that year".
Thus, for a situation where gifts made to Non-Citizen Spouses exceed the $125,000, the excess amounts would be subject to subject to Gift Tax.