The gift tax free amount used to be $10,000 per person per year, but has been increased in 2002 to $11,000 by the Economic Growth and Tax Relief Reconciliation Act of 2001 (in short, Bush's new tax act passed in 2001). If you are married, you and your wife can give $22,000. If your son or daughter is married, you and your wife can give a total of $44,000 to them as a couple.
In addition, you can give school tuition and medical payments gift tax free, provided the payments are made directly to the school or medical service provider. Thus, a grandparent can pay the college tuition of a grandson, pay his medical bills, and also give him $11,000, all gift tax free.
You can give your spouse any amount free of gift tax. Transfers of cash or property between spouses are tax free.