The federal gift tax annual exclusion for 2024 is $18,000 per person

You can give up to $18,000 to any one person in a calendar year without filing a gift tax return with the IRS. This amount is called the annual exclusion. If you give more than $18,000 to a single person in one year, you must file Form 709 (the gift tax return) with your federal tax return, even if you owe no tax.

The annual exclusion applies to each recipient separately. This means you can give $18,000 to your daughter, $18,000 to your son, $18,000 to your grandchild, and $18,000 to a friend all in the same year without filing. The limit resets on January 1 each year.

The $18,000 figure changes most years because it is tied to inflation and rounds to the nearest $1,000. In 2023 it was $17,000. In 2025 it will likely be $19,000, though the IRS announces the new amount in late October of the prior year.

Key Takeaways

  • You can give $18,000 per person per year (in 2024) without filing a gift tax return, and this limit resets every January 1.
  • If you give more than $18,000 to one person in a year, you must file Form 709 even if you owe no gift tax.
  • Married couples can combine their exclusions, allowing them to give $36,000 per person per year without filing.
  • Gifts to spouses who are U.S. citizens and gifts that pay tuition or medical bills directly to the provider are unlimited and never count against the exclusion.
  • The annual exclusion amount changes yearly with inflation; check the IRS website each October for the next year's limit.

How the annual exclusion works in practice

The annual exclusion is a per-recipient, per-year limit. If you give your adult child $20,000 in March, you have used $18,000 of your exclusion and must report the $2,000 overage on Form 709. If you then give the same child another $5,000 in December, that entire $5,000 is over the limit and must also be reported.

The exclusion applies to cash, stocks, real estate, vehicles, jewelry, or any other property you transfer as a gift. It does not matter whether the gift is in writing or verbal, or whether the recipient is a family member or someone unrelated to you.

Filing Form 709 does not mean you owe gift tax. Most people who file do not owe tax because they have a lifetime exemption (a separate, much larger limit). Filing simply reports the gift to the IRS and uses a portion of your lifetime exemption.

Married couples and the annual exclusion

If you are married and file jointly, you and your spouse can each use your own $18,000 annual exclusion. This means you can give $36,000 per person per year without filing. For example, you and your spouse can each give your daughter $18,000 in the same year, totaling $36,000, with no filing requirement.

If your spouse is not a U.S. citizen, the annual exclusion is lower ($19,000 in 2024) and different rules apply to gifts between spouses. Consult a tax professional if this situation applies to you.

Gifts that do not count against the annual exclusion

Certain gifts are unlimited and never use your annual exclusion. Gifts to your spouse (if your spouse is a U.S. citizen) have no limit. You can give your spouse $1 million, $10 million, or any amount without filing or owing tax.

Gifts that pay tuition or medical expenses directly to the provider also do not count. If you pay your grandchild's college tuition directly to the university, or pay a hospital bill directly for a family member's surgery, those payments are unlimited and never reported. The key is that you pay the provider directly, not the person receiving the service.

Gifts to political organizations and certain charitable organizations are also unlimited. Gifts to your spouse's estate and gifts of future interests (such as the right to use property starting in five years) follow different rules and should be reviewed with a tax professional.

What happens if you exceed the annual exclusion

If you give more than $18,000 to one person in a calendar year, you file Form 709 with your tax return for that year. You report the overage amount. The IRS then deducts that overage from your lifetime exemption, which is currently $13.61 million (in 2024).

For most people, exceeding the annual exclusion has no immediate tax consequence because the lifetime exemption is so large. You do not owe gift tax unless your total lifetime gifts exceed $13.61 million. However, filing Form 709 is still required, and failure to file can result in penalties.

The lifetime exemption amount changes with inflation and also changes based on federal law. It is scheduled to drop to roughly $7 million per person on January 1, 2026, unless Congress extends current law. This is an important date to watch if you are planning large gifts.

Gifts that look like gifts but have special rules

A loan to a family member is not a gift if you charge interest at the IRS minimum rate (called the Applicable Federal Rate, or AFR). If you lend money interest-free or at below-market rates, the IRS may treat part of the loan as a gift. The AFR changes monthly; check the IRS website for the current rate before making a family loan.

Forgiving a loan is treated as a gift in the year you forgive it. If you lend your child $25,000 and later forgive the debt, you have made a $25,000 gift and must file Form 709 if it exceeds your annual exclusion.

Paying someone else's debt (such as paying off a credit card or mortgage for a family member) is also a gift. The amount you pay counts toward your annual exclusion limit.

State gift taxes and other considerations

Most states do not have a gift tax. However, a few states (Connecticut, Delaware, Illinois, Louisiana, North Carolina, and Tennessee) have had gift taxes in the past or currently do. State rules vary widely, and some states tax gifts while others do not. Check your state's tax authority website if you live in or give gifts to someone in a state that may have a gift tax.

If you receive a gift, you do not owe federal income tax on it. Gifts are not taxable income to the recipient. The person who gives the gift is responsible for any tax filing, not the person who receives it.

Frequently Asked Questions

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

No. Gifts of $18,000 or less per person per year do not require you to file Form 709. You can give as many gifts under $18,000 as you want to as many people as you want without any filing requirement.

Can I split a gift with my spouse to avoid exceeding the limit?

Yes. If you and your spouse agree to "split" a gift, you can treat it as if you each gave half. This allows you to give up to $36,000 per person per year. You must both file Form 709 to report the split, but you will not owe tax. This is called gift splitting.

What if I give someone $20,000 one year and $15,000 the next year?

Each year is separate. The $20,000 in year one requires you to file Form 709 because it exceeds $18,000. The $15,000 in year two is under the limit and requires no filing. The two years do not add together.

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

Yes. The fair market value of the stock or cryptocurrency on the date you give it counts toward your annual exclusion. If you give stock worth $20,000, you have exceeded the $18,000 limit and must file Form 709.

What if I give a gift and the recipient refuses it?

A refused gift is still treated as a gift for tax purposes. You cannot avoid the annual exclusion by giving something the recipient does not want. If you want to undo a gift, you must take it back formally and document the return.