The federal gift tax threshold for 2024

You can give up to $18,000 per person per year without triggering any federal gift tax reporting requirement. This amount is called the annual exclusion. If you give more than $18,000 to one person in a single calendar year, you must file a gift tax return (Form 709) with the IRS, even if you do not owe tax.

The $18,000 figure changes each year based on inflation. The IRS announces the new amount in October for the following year. In 2023 it was $17,000; in 2024 it is $18,000. Check the IRS website or your tax preparer before giving large amounts to confirm the current year's threshold.

This threshold applies to cash, checks, and any other property you give away. It does not matter whether the gift is to a family member, friend, or anyone else. The rule is per recipient: you can give $18,000 to one person and $18,000 to another person in the same year without reporting either gift.

Key Takeaways

  • You can give $18,000 per person per year (in 2024) without filing a gift tax return with the IRS.
  • The annual exclusion amount changes yearly for inflation, so verify the current year's limit before making large gifts.
  • If you give more than the annual exclusion to one person in one year, you must file Form 709 even if you owe no tax.
  • Married couples can each give $18,000 to the same person, totaling $36,000, without either spouse filing a return.
  • Filing a gift tax return does not mean you owe tax; it means the IRS is notified and the amount counts against your lifetime gift and estate tax exemption.

What happens when you exceed the annual exclusion

If you give more than $18,000 to one person in a calendar year, the excess amount does not result in a tax bill right away. Instead, it counts against your lifetime gift and estate tax exemption, which is $13.61 million per person in 2024. You must report the overage on Form 709, but you will owe no federal tax unless and until your total lifetime gifts plus your estate exceed $13.61 million.

For most people, this means filing Form 709 is a paperwork requirement, not a tax bill. The form notifies the IRS that you have used part of your lifetime exemption. Your tax preparer or the IRS can walk you through the filing if you need to report a gift over the annual exclusion.

State gift taxes are separate from federal gift tax. A handful of states (Connecticut, Delaware, Illinois, Louisiana, Mississippi, New York, North Carolina, Oregon, Rhode Island, Tennessee, and Washington) have their own gift tax or estate tax with different thresholds. If you live in or are giving to someone in one of these states, check that state's tax rules as well.

Gifts that do not count toward the annual exclusion

Certain gifts are exempt from the annual exclusion limit entirely. Gifts to a spouse who is a U.S. citizen have no limit — you can give your spouse any amount of cash or property without filing a return or using your lifetime exemption. Gifts to political organizations and charities that may have access to under Section 501(c)(3) of the tax code also do not count.

Payments made directly to a medical provider or educational institution on behalf of someone else do not count as taxable gifts, even if the amount is large. The payment must go straight to the provider or school, not to the person receiving the care or education. For example, paying a hospital bill directly for your grandchild does not trigger gift tax, but giving your grandchild $50,000 to pay the bill themselves does count toward the annual exclusion.

How married couples can double their giving

If you are married, both you and your spouse can each give $18,000 to the same person in the same year, for a total of $36,000, without either of you filing a return. This is called gift splitting. You do not need your spouse's permission to split a gift; the IRS allows it automatically for married couples filing jointly.

Gift splitting works only if you are married and file a joint tax return. If you file separately or are unmarried, you each have your own $18,000 annual exclusion but cannot combine them. If one spouse gives $25,000 to a child and the other gives $10,000 to the same child, only the first spouse needs to file Form 709 for the $7,000 overage.

Timing and calendar year rules

The annual exclusion resets on January 1 each year. A gift you make on December 31 and another on January 1 are counted in different tax years. If you give someone $15,000 on December 20 and another $10,000 on January 5, the first gift counts toward the prior year's exclusion and the second toward the new year's exclusion. Only the second gift requires a return.

The date the gift is received, not the date you intend it or sign a check, determines which tax year it falls into. A check mailed on December 31 but not deposited until January 15 is treated as a gift in January. If you are close to the annual exclusion limit and want to give more, timing your gifts across two calendar years can help you stay under the threshold in each year.

Loans versus gifts

A loan is not a gift, even if you never intend to collect it. However, the IRS has rules about what counts as a real loan. A bona fide loan must have a written agreement, a stated interest rate, and a repayment schedule. The interest rate must be at least the IRS Applicable Federal Rate (AFR), which changes monthly and is published on the IRS website.

If you lend money to a family member without a written agreement or interest, the IRS may treat it as a gift. If the loan is large and forgiven later (meaning you decide not to collect it), the forgiveness itself may be treated as a gift in the year you forgive it. To avoid confusion, put any substantial loan in writing and charge at least the minimum IRS rate.

Frequently Asked Questions

Do I owe taxes on a cash gift I receive?

No. The person who gives the gift is responsible for any tax reporting, not the recipient. You can receive any amount of cash without owing federal income tax on it. The annual exclusion and gift tax rules apply only to the person giving the gift.

What if I give someone $20,000 in one year?

You must file Form 709 to report the $2,000 overage (in 2024). You will owe no federal tax, but the $2,000 counts against your $13.61 million lifetime exemption. Your tax preparer can file this form for you.

Can I give my child money for college without it counting as a gift?

If you pay the college directly, the payment does not count toward the annual exclusion, no matter the amount. If you give your child cash or a check to pay the college themselves, it counts as a gift and is subject to the $18,000 annual exclusion.

Does the annual exclusion apply to gifts of stock or property?

Yes. The annual exclusion applies to any property you give away, including stocks, real estate, vehicles, and jewelry. The value of the property on the date you give it determines whether it exceeds the exclusion. Gifts of appreciated property may also trigger capital gains tax for the recipient later.

What if I give someone money but they pay me back later?

If repayment is expected and documented in writing with an interest rate, it is a loan, not a gift, and the annual exclusion does not apply. If there is no written agreement and no expectation of repayment, the IRS may treat it as a gift regardless of whether money changes hands later.