The annual gift tax exclusion lets you give up to $18,000 per person per year with no tax filing required

The annual exclusion is the amount you can give to any one person in a calendar year without filing a gift tax return or using any of your lifetime exemption. For 2024, that amount is $18,000 per recipient. You can give this amount to as many people as you want in the same year — the limit applies per person, not per giver.

If you give more than $18,000 to one person in a single year, you must file Form 709 (United States Gift Tax Return) with the IRS, even if you owe no tax. The excess amount counts against your lifetime exemption, which is currently $13.61 million per person. Most people never hit that lifetime cap, which is why filing the form is often the only consequence of exceeding the annual limit.

The annual exclusion amount changes each year based on inflation. The IRS announces the new figure in October for the following year. Married couples can combine their exclusions, meaning you and your spouse together can give $36,000 to one person in 2024 without filing.

Key Takeaways

  • You can give $18,000 per person per year in 2024 without filing a gift tax return or reducing your lifetime exemption.
  • Married couples can give $36,000 combined to the same person without filing, as long as both spouses consent to the gift.
  • Gifts above the annual limit require filing Form 709, but most people still owe no tax because the excess counts against a $13.61 million lifetime exemption.
  • The annual exclusion amount increases with inflation and is announced by the IRS each October for the following year.
  • Certain gifts are never taxed, including direct payments to schools or medical providers, gifts to spouses, and gifts to charities.

Gifts that don't count against any limit

Some gifts fall outside the tax system entirely. If you pay a doctor, hospital, or school directly on someone else's behalf, that payment is not a taxable gift — no matter the amount. The key is that you pay the provider directly, not the person receiving the care or education.

Gifts to your spouse have no limit if your spouse is a U.S. citizen. Gifts to charities registered with the IRS as tax-exempt organizations are also unlimited and may reduce your own taxable income. Gifts to political organizations and candidates are not subject to federal gift tax, though they may be subject to other campaign finance rules.

What counts as a gift for tax purposes

A gift is a transfer of money or property where you receive nothing of value in return. If you lend money to someone and they sign a promissory note agreeing to repay it at a reasonable interest rate, that is a loan, not a gift. If you forgive the loan later, the forgiveness becomes a gift at that point.

Gifts include cash, real estate, vehicles, investments, artwork, jewelry, and any other property. They also include forgiving a debt. If you sell something to someone for less than its fair market value, the difference may be treated as a gift. For example, if you sell a car worth $20,000 for $5,000, the $15,000 difference could be a taxable gift.

Transfers that are not gifts include payments for goods or services at fair market value, inheritances (which are handled under estate tax law, not gift tax), and transfers to a spouse or charity. Tuition and medical expenses paid directly to providers are also not gifts, even though you are paying on someone else's behalf.

How the lifetime exemption works

If you give more than $18,000 to one person in a year, the excess reduces your lifetime exemption. This exemption is the total amount you can give away during your lifetime and at death before federal gift and estate tax applies. For 2024, your lifetime exemption is $13.61 million.

When you file Form 709 to report a gift over the annual limit, you are not paying tax — you are documenting that you have used part of your lifetime exemption. Most people never use their full exemption because $13.61 million is a very large amount. The exemption is indexed to inflation and changes each year.

If you are married, each spouse has a separate $13.61 million exemption. Spouses can also use a technique called portability to combine their unused exemptions after one spouse dies, though this requires filing an estate tax return even if no tax is owed.

State gift taxes and other rules

A few states have their own gift tax in addition to federal tax. Connecticut, Delaware, Louisiana, North Carolina, and Tennessee have estate taxes that may apply to large gifts made shortly before death. Most states have no gift tax at all. If you live in or give property to someone in a state with a gift tax, check that state's rules, as the limits and rates differ from federal law.

Some gifts trigger other reporting requirements. If you give more than $10,000 in cash in a single transaction, the recipient may need to file a Currency Transaction Report. If you give a gift that is later used to buy property, the gift may affect the recipient's basis in that property for tax purposes.

Documenting gifts and keeping records

You do not need to file anything if your gift is under $18,000 per person per year. However, keeping a record of large gifts is wise. If you give someone $15,000 and later the IRS questions whether it was a loan or a gift, documentation helps prove your intent.

For gifts over the annual limit, file Form 709 with your tax return. The form asks for the date of the gift, the recipient's name and address, a description of what was given, and the fair market value. If you are married and both spouses are giving, you can file a joint Form 709.

If you give real estate or other property that is hard to value, you may need a professional appraisal. The IRS can challenge the value you report, so keeping documentation of how you arrived at that value protects you if there is a dispute.

Frequently Asked Questions

Can I give someone $18,000 twice in one year without filing?

No. The $18,000 annual exclusion is per calendar year, not per transaction. If you give someone $10,000 in January and $10,000 in December, that is $20,000 total, and you must file Form 709 for the $2,000 excess. The calendar year runs January 1 through December 31.

If I give my child $25,000, do I owe tax on the $7,000 over the limit?

No. You file Form 709 to report the excess $7,000, but you do not owe tax. The $7,000 counts against your $13.61 million lifetime exemption. Unless you give away more than $13.61 million in your lifetime, you will never owe gift tax.

Does a gift of stock or cryptocurrency count the same way as cash?

Yes. The annual exclusion applies to gifts of any property, including stock, cryptocurrency, real estate, and vehicles. The value is measured at the fair market value on the date you give it. If you give stock worth $18,000 on the day of the gift, that uses your full annual exclusion for that person.

What if I give money to my grandchild's 529 college savings plan?

A contribution to a 529 plan is a gift and counts against the annual exclusion. However, 529 plans allow a special election: you can give up to five years' worth of exclusions ($90,000 in 2024) in a single year if you file Form 709 and elect to spread the gift over five years. This is a rare exception to the annual limit.

Do I have to tell the person I gave them a gift for tax purposes?

No. The gift tax is your responsibility as the giver, not the recipient's. The person who receives the gift does not report it on their tax return or owe any tax on it. You file Form 709 if required, and that is between you and the IRS.