The federal gift tax threshold for 2024

You can give up to $18,000 per person per year without filing a gift tax return or reducing your lifetime exemption. This is called the annual exclusion. The amount changes most years — it was $17,000 in 2023 and $16,000 in 2022 — because it adjusts for inflation in $1,000 increments.

If you give more than $18,000 to one person in a single year, you must file Form 709 (the gift tax return) with the IRS, even if you owe no tax. The excess amount counts against your lifetime exemption, which is $13.61 million for 2024. Most people never hit that lifetime cap, so filing the form is usually a paperwork requirement, not a tax bill.

The annual exclusion applies to each recipient separately. You can give $18,000 to your daughter, $18,000 to your son, $18,000 to your grandchild, and $18,000 to a friend in the same year without any of those gifts triggering tax or requiring a return.

Key Takeaways

  • You can give $18,000 per person per year (2024) without filing a gift tax return or using any of your lifetime exemption.
  • The annual exclusion amount changes yearly with inflation, so check the current year's limit before giving large amounts.
  • Gifts to spouses and to charities have no limit and never count against your exemption.
  • If you exceed the annual exclusion, you file Form 709 but usually owe no tax unless you have already used your lifetime exemption.
  • State gift taxes exist in only a few states and operate separately from federal rules.

Gifts to your spouse and to charities

Gifts to your spouse have no limit. You can give your spouse any amount of money or property without filing a return or using any exemption, as long as your spouse is a U.S. citizen. If your spouse is not a U.S. citizen, the annual exclusion is higher ($185,000 for 2024) but still capped.

Gifts to may have access to charities also have no limit and never count against your exemption. A may have access to charity is one that holds 501(c)(3) status or equivalent recognition from the IRS. You do not need to file a gift tax return for charitable donations, though you may want to for your own records if you claim a deduction on your income tax return.

What counts as a gift

A gift is a transfer of money or property where you receive nothing of value in return. If you sell something to someone for less than it is worth, the difference is treated as a gift. If you forgive a loan, that forgiveness is a gift. If you pay someone's tuition or medical bills directly to the provider, that payment is usually not a gift for tax purposes — it falls under a separate unlimited exclusion.

Gifts of future interest — such as the right to use property starting in five years — are treated differently than gifts of present interest. Most annual exclusions apply only to gifts of present interest, meaning the recipient can use or benefit from the gift immediately. Gifts to trusts, for example, often do not may have access to for the annual exclusion unless the trust is structured to allow present interest.

Loans are not gifts, even if you never expect repayment. To avoid gift tax, a loan must have a written promissory note and charge at least the IRS minimum interest rate (which changes monthly). If you lend money with no note and no interest, the IRS may treat it as a gift if you later forgive it.

Tuition and medical payments — the unlimited exclusion

You can pay someone's tuition or medical expenses directly to the school or provider with no limit and no gift tax consequences. This exclusion is separate from the annual exclusion and applies only when you pay the provider directly, not when you give money to the person to pay the bill themselves.

If you pay $50,000 toward your grandchild's college tuition by writing a check to the university, that payment does not count as a gift and does not use any of your exemption. If you give your grandchild $50,000 in cash to pay tuition themselves, the full amount counts as a gift and exceeds the annual exclusion.

State gift taxes

Only a handful of states have their own gift tax: Connecticut, Delaware, Illinois, Louisiana, Mississippi, North Carolina, and Tennessee. Most states have no gift tax at all. If your state does have a gift tax, it usually has its own annual exclusion and lifetime exemption, separate from federal rules.

State gift tax rules vary widely. Some states tie their exemption to the federal amount; others set their own. If you live in or give to someone in a state with a gift tax, check that state's department of revenue website for current rules, because state thresholds and rates differ from federal ones.

Married couples and the annual exclusion

If you are married, you and your spouse can each give $18,000 per person per year. This means a married couple can give $36,000 to one person in a year without either spouse filing a return. This is called gift splitting.

To use gift splitting, both spouses must agree, and you must file Form 709 if either spouse gives more than their $18,000 share to any one person. You do not need to split every gift — you can choose which gifts to split and which to keep separate. The election to split is made on Form 709 when you file it.

What happens if you exceed the annual exclusion

If you give more than $18,000 to one person in one year, you file Form 709 with your tax return. The excess amount is subtracted from your lifetime exemption of $13.61 million. Since most people never give away $13.61 million in their lifetime, filing the form is usually the only consequence.

You do not owe gift tax on the excess unless you have already used up your entire lifetime exemption through previous gifts. If you have not, the excess simply reduces the amount you can give tax-free later in life or at death. Your estate will owe tax only if the total of all your gifts and your estate exceeds the exemption at the time of your death.

The lifetime exemption amount changes with inflation and also changes based on federal law. It was $12.92 million in 2023 and is scheduled to drop to roughly $7 million per person in 2026 unless Congress acts. If you plan to give large amounts, the timing of those gifts can affect your tax outcome.

Frequently Asked Questions

Do I have to report gifts under $18,000?

No. You do not file a gift tax return for gifts under the annual exclusion. You only file Form 709 if you give more than $18,000 to one person in one year. Gifts to your spouse and to charities never require a return, regardless of amount.

Does the $18,000 limit apply to each gift or to the total I give in a year?

It applies per person per year. If you give $18,000 to your daughter in January and another $18,000 in December, that is $36,000 total to one person, and you must file Form 709. The limit resets on January 1 each year.

If I give someone money and they give me something back, is it still a gift?

If the value of what you receive is less than what you gave, the difference is a gift. If you give $10,000 and receive something worth $3,000, the $7,000 difference counts as a gift. If you receive equal value, it is a sale or exchange, not a gift.

Can I give my child money for a down payment on a house without it being a gift?

If you give the money with no expectation of repayment, it is a gift and counts toward the annual exclusion. If you want it to be a loan, you must have a written promissory note with an interest rate at least equal to the IRS minimum rate. Without a note, the IRS will treat it as a gift if you later forgive it.

What if I give someone a car or property instead of cash?

The fair market value of the property is what counts. If you give a car worth $20,000, that is a $20,000 gift. You must determine the fair market value as of the date of the gift. For real estate, an appraisal is often needed. For vehicles, you can use NADA Guides or similar resources.