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 using any of your lifetime exemption. This is called the annual exclusion. If you give more than $18,000 to one person in a single year, you must file Form 709 with the IRS, even if you owe no tax.

The $18,000 amount changes most years. The IRS adjusts it for inflation in $1,000 increments, so it may be different in 2025 and beyond. Check the IRS website or your tax preparer before giving large amounts to confirm the current year's limit.

This limit applies to gifts of money, property, investments, or anything else of value. It does not matter whether the recipient is a family member, friend, or stranger. Each person you give to has their own separate $18,000 allowance.

Key Takeaways

  • You can give $18,000 per person per year in 2024 without filing a gift tax return, and this amount changes annually for inflation.
  • Married couples can combine their limits and give $36,000 per person per year if both spouses agree and file jointly.
  • Gifts above the annual limit do not trigger immediate tax but require you to file Form 709 and reduce your lifetime exemption of $13.61 million (2024).
  • Certain gifts are never taxed: tuition paid directly to schools, medical expenses paid directly to providers, gifts to spouses, and gifts to charities.
  • State gift taxes exist in some states and have their own limits separate from federal rules.

How married couples can double their giving

If you are married, both you and your spouse have separate $18,000 annual exclusions. This means you can give $36,000 per person per year as a couple. The key requirement is that both spouses must consent to the gift and file Form 709 together if the total exceeds the limit.

This works even if only one spouse has the money. For example, if your spouse earns all the household income and gives $36,000 to your adult child, both of you must agree and report it correctly. If you do not both consent, the IRS may treat the entire amount as coming from one spouse, which could exceed their individual limit.

Married couples also share a combined lifetime exemption of $27.22 million (2024), though this applies only if gifts exceed the annual limit. For most households, the annual exclusion is the only number that matters.

What happens when you give more than $18,000

Giving more than $18,000 to one person in one year does not immediately result in a tax bill. Instead, the excess amount reduces your lifetime gift and estate tax exemption. In 2024, you have a lifetime exemption of $13.61 million. Any gift over $18,000 per person per year counts against this total.

You must file Form 709 (Gift Tax Return) with the IRS to report the overage, even though you will owe no tax at the time. This form documents the gift and notifies the IRS that you have used part of your lifetime exemption. Failing to file when required can result in penalties and interest.

The lifetime exemption is very high, so most people never pay gift tax during their lifetime. However, the exemption is set to drop significantly after 2025 — it is scheduled to fall to roughly $7 million per person unless Congress changes the law. If you plan to give large amounts, consult a tax professional about timing.

Gifts that are never taxed

Some gifts fall outside the tax system entirely and do not count toward your annual limit or lifetime exemption. Tuition paid directly to a school is never taxed, no matter the amount. The same applies to medical expenses paid directly to a healthcare provider. You can pay someone's college tuition and their hospital bills without any tax consequence, as long as you pay the institution directly.

Gifts to your spouse are also unlimited and tax-free, as long as your spouse is a U.S. citizen. Gifts to charities and nonprofit organizations are never taxed. Gifts to political organizations and candidates are subject to different rules and limits, not gift tax.

These exceptions exist because the IRS does not consider them "gifts" in the tax sense — they are payments for services or transfers between spouses. If you pay tuition but the money goes to the student instead of the school, it counts as a regular gift and is subject to the annual limit.

State gift taxes and how they differ

Only a handful of states have their own gift tax: Connecticut, Delaware, Illinois, Louisiana, Mississippi, North Carolina, and Tennessee. If you live in one of these states, you may owe state gift tax in addition to federal rules, or instead of federal tax if your state has a lower threshold.

State limits and rules vary widely. Some states follow federal thresholds; others have much lower annual exclusions. Connecticut, for example, has a $17,000 annual exclusion (as of 2024), slightly below the federal limit. You need to check your state's tax authority website or consult a local tax preparer to understand your state's specific rules.

If you live in a state without a gift tax, you follow only federal rules. If you give to someone in another state, that recipient's state tax status does not matter — your state's rules apply to you as the giver.

How to report gifts on your taxes

If all your gifts in a year are under $18,000 per person, you do not file anything. Gifts are not reported on your regular income tax return (Form 1040). You simply keep records of what you gave and to whom, in case the IRS asks.

If you give more than $18,000 to one person in one year, you file Form 709 with the IRS by April 15 of the following year (or by your tax filing deadline if you request an extension). Form 709 is a separate form from your income tax return, though you file it at the same time. You will need the recipient's name, address, and Social Security number or tax ID.

If you are married and your spouse also gave gifts, you may file Form 709 jointly or separately, depending on your situation. A tax preparer can help you decide which approach is better for your household.

Frequently Asked Questions

Do I have to report gifts to the IRS if they are under $18,000?

No. Gifts under the annual limit do not require any filing or reporting to the IRS. You do not report them on your income tax return. Keep your own records for your records, but the IRS does not need to know about them.

If I give my child $20,000, do I owe tax on the extra $2,000?

You do not owe tax immediately, but you must file Form 709 to report the $2,000 overage. That $2,000 reduces your lifetime exemption from $13.61 million to $13.608 million. Unless you give away more than your lifetime exemption, you will never actually pay tax on it.

Can I split a large gift across two years to avoid filing?

Yes. If you give $20,000 to someone, you could give $10,000 in December and $10,000 in January of the next year. Each year's gift would be under the $18,000 limit, and you would not need to file Form 709. However, you must genuinely intend to make two separate gifts — the IRS can challenge artificial splitting.

Does my child have to pay income tax on a gift I give them?

No. Gifts are not income, so your child does not owe income tax on money or property you give them. The tax burden, if any, falls on the giver, not the recipient. The only exception is if the gift generates income later — for example, if you give them stock that pays dividends.

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

If you genuinely lend money with the expectation of repayment, it is not a gift and does not count toward your annual limit. However, you should document the loan in writing with terms and a repayment schedule. If the IRS suspects you called a gift a loan to avoid reporting it, they may reclassify it as a gift.