The federal gift tax annual exclusion 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 the annual exclusion amount set by the IRS for 2024. If you give more than $18,000 to one person in a single year, you must file Form 709 (Gift Tax Return) with the IRS, even if you owe no tax.

The $18,000 limit resets on January 1 each year. If you give $20,000 to your adult child in March, you have used $18,000 of the annual exclusion and $2,000 of your lifetime exemption. The annual exclusion amount changes most years — it was $17,000 in 2023 and $16,000 in 2022 — because it is tied to inflation and rounded to the nearest $1,000.

Married couples can combine their exclusions. If you are married and file jointly, you and your spouse together can give $36,000 per person per year without filing a return. This is called gift splitting. You do not need your spouse's permission to use their exclusion, but you must report it on your tax return.

Key Takeaways

  • The annual exclusion is $18,000 per person in 2024, meaning you can give that amount to as many people as you want without filing a gift tax return.
  • Gifts above the annual exclusion require you to file Form 709, but you typically owe no tax unless you have already used your lifetime exemption.
  • Married couples can give $36,000 per person per year by combining their exclusions through gift splitting.
  • Certain gifts — including tuition paid directly to a school and medical expenses paid directly to a provider — do not count toward the annual exclusion at all.
  • Your lifetime exemption is currently $13.61 million (2024), but this amount is set to drop to roughly $7 million per person in 2026 unless Congress acts.

Gifts that do not count toward your annual exclusion

Some gifts are completely exempt from gift tax rules and do not reduce your annual exclusion or lifetime exemption. The most common are tuition paid directly to an educational institution and medical expenses paid directly to a healthcare provider. You can pay someone's college tuition or surgery bill in full without any gift tax consequence, as long as you pay the provider directly.

Gifts to your spouse (if your spouse is a U.S. citizen) are unlimited and never count toward your exclusion. Gifts to a political organization or a may have access to charity also do not count. If you give money to a charity, you may also be able to claim a tax deduction on your income tax return — a separate benefit from the gift tax rules.

Gifts that are not "present interests" — meaning the recipient cannot use or enjoy them right now — may not may have access to for the annual exclusion. For example, if you put money in a trust that your grandchild cannot touch until age 30, that gift may not may have access to. This is a complex area; if you are setting up a trust or making a conditional gift, consult a tax professional.

What happens if you exceed the annual exclusion

If you give more than $18,000 to one person in 2024, you must file Form 709 with the IRS. Filing the form does not mean you owe tax. Instead, the excess amount is subtracted from your lifetime exemption, which is currently $13.61 million per person (2024).

For most people, this has no immediate tax consequence because the lifetime exemption is so large. If you give $25,000 to your child, you file Form 709, and $7,000 is deducted from your lifetime exemption. You owe no gift tax. The $7,000 only matters if you eventually give away more than $13.61 million in your lifetime or leave an estate larger than that amount when you die.

However, your lifetime exemption is temporary. It is scheduled to drop to approximately $7 million per person on January 1, 2026, unless Congress extends the current law. If you are planning to give away large sums, the timing matters. Gifts made before 2026 use the higher exemption; gifts made after 2026 will use the lower one.

Gifts to spouses and charitable organizations

Gifts to your spouse have no limit if your spouse is a U.S. citizen. You can give your spouse $1 million, $10 million, or any amount, and no gift tax applies. This is called the unlimited marital deduction. If your spouse is not a U.S. citizen, the annual exclusion is higher ($185,000 in 2024) but still limited.

Gifts to may have access to charities — organizations recognized by the IRS as tax-exempt — are also unlimited and do not count toward your annual exclusion or lifetime exemption. When you give to a charity, you may also deduct the gift on your income tax return, which reduces your taxable income that year. You will need a receipt or written acknowledgment from the charity.

How to report gifts on your tax return

If all your gifts in a year are under $18,000 per person, you do not file anything. No form, no return, no report to the IRS. You simply keep your own records of who you gave money to and how much.

If you give more than $18,000 to any one person in a year, file Form 709 (United States Gift Tax Return) with the IRS. You file it with your regular income tax return (Form 1040) by April 15 of the following year, or by October 15 if you file an extension. Form 709 lists each gift over $18,000, the recipient's name and address, and the date and value of the gift.

If you are married and using gift splitting, both spouses must sign Form 709 and file it together. The form tells the IRS that you are splitting gifts between you and your spouse, which allows you to use both annual exclusions.

State gift taxes

The federal government has a gift tax, but most states do not. Only a few states — Connecticut, Delaware, Illinois, Louisiana, Minnesota, Mississippi, Missouri, Nevada, North Carolina, Pennsylvania, South Dakota, Tennessee, and Wyoming — have their own gift taxes or inheritance taxes that may apply to gifts you make.

State rules vary widely. Some states tax gifts made during your lifetime; others tax only what you leave in your will. Some have annual exclusions similar to the federal limit; others do not. If you live in or give money to someone in one of these states, check that state's tax department website or consult a tax professional to understand what you owe.

Frequently Asked Questions

Do I owe tax if I give my child $20,000?

No. You file Form 709 to report the gift, but you owe no tax. The $2,000 over the $18,000 annual exclusion is deducted from your $13.61 million lifetime exemption. Unless you give away more than $13.61 million in your lifetime, this has no tax consequence.

Can I give $18,000 to multiple people without filing?

Yes. The $18,000 annual exclusion applies per person per year. You can give $18,000 to your child, $18,000 to your grandchild, $18,000 to your friend, and so on, all in the same year, without filing a return. You can give to as many people as you want as long as each person receives no more than $18,000.

What if I give money to my spouse?

Gifts to your spouse (if a U.S. citizen) are unlimited and never count toward your annual exclusion or lifetime exemption. You can give your spouse any amount with no gift tax consequence and no filing requirement.

Does paying someone's tuition count as a gift?

Only if you give money to the person. If you pay the tuition bill directly to the school, it does not count as a gift and does not use your annual exclusion. You can pay unlimited tuition directly to an educational institution. If you give money to the student and they pay the tuition, it counts as a gift.

What happens to my lifetime exemption after 2025?

The current lifetime exemption of $13.61 million per person is set to expire on December 31, 2025. Starting January 1, 2026, the exemption is scheduled to drop to approximately $7 million per person (adjusted for inflation), unless Congress passes new legislation. Gifts made before 2026 use the higher exemption amount.