The annual gift tax exclusion lets you give money to as many people as you want without filing a gift tax return

For 2024, you can give up to $18,000 per person per year without triggering federal gift tax reporting. That amount resets on January 1 each year. You can give this amount to as many different people as you want — your children, grandchildren, friends, anyone — and none of it counts toward your lifetime gift and estate tax limit.

The exclusion amount changes most years. The IRS adjusts it for inflation in $1,000 increments. In 2023 it was $17,000. In 2025 it will likely be $18,000 or $19,000, depending on inflation data released in October 2024. Check the IRS website or your tax preparer closer to the year you plan to give.

If you give more than the annual exclusion 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 overage counts against your lifetime exemption — a separate limit of $13.61 million per person in 2024 — but you still owe no tax unless you exceed that lifetime total.

Key Takeaways

  • You can give $18,000 per person per year in 2024 without filing a gift tax return or owing any tax.
  • The annual exclusion resets every January 1 and applies separately to each recipient, so you can give $18,000 to ten different people in one year.
  • Gifts to your spouse have no limit at all, and gifts to pay someone's medical bills or tuition directly to the provider do not count as gifts.
  • If you give more than $18,000 to one person in a year, you file Form 709 but usually owe no tax; the overage counts against your $13.61 million lifetime exemption.
  • State gift taxes exist in a few states and have their own rules separate from federal law.

Gifts to your spouse and direct medical or education payments do not count

You can give unlimited money to your spouse with no tax consequence, 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 in 2024) but still limited. Consult a tax professional if this applies to you.

Certain payments do not count as taxable gifts at all, even if they exceed the annual exclusion. If you pay someone's medical bills directly to the hospital, doctor, or clinic, that payment is not a gift. The same applies to tuition paid directly to a school or university. You can pay unlimited amounts this way without filing Form 709 or using any of your lifetime exemption. The key is that you pay the provider directly, not the person receiving the care or education.

Gifts to charities registered with the IRS as tax-exempt organizations also do not count as taxable gifts and may be deductible on your income tax return.

What happens if you give more than $18,000 to one person in a year

You must file Form 709 with the IRS by April 15 of the following year. For example, if you give $25,000 to your daughter in 2024, you file Form 709 with your 2024 tax return due April 15, 2025. You will owe no federal tax on that gift.

The $7,000 overage (the amount above $18,000) counts against your lifetime exemption of $13.61 million. That means your lifetime exemption shrinks to $13.603 million. You only owe actual tax if your total gifts and estate combined exceed $13.61 million in your lifetime — a threshold very few people reach.

Filing Form 709 is straightforward but required. If you do not file when you should have, the IRS can assess penalties and interest. A tax preparer can file it for you for a modest fee if you are unsure how to complete it yourself.

Married couples can combine their exclusions

If you are married, each spouse has a separate $18,000 annual exclusion. That means a married couple can give $36,000 per person per year without filing a return. If one spouse gives more than $18,000 to someone, the other spouse can "split" the gift on Form 709, which lets both spouses use their exclusions.

For example, if you give $30,000 to your son and your spouse gives nothing, you can file Form 709 and elect gift splitting. This treats the gift as if each spouse gave $15,000, so neither of you exceeds the $18,000 limit and neither owes tax. Both spouses must consent to gift splitting, and it must be reported on Form 709 even though no tax is owed.

State gift taxes are separate from federal law

Only a handful of states impose their own gift tax: Connecticut, Delaware, Illinois, Louisiana, Mississippi, North Carolina, and Tennessee. Each state sets its own annual exclusion and lifetime limit, which may be lower than the federal amounts.

If you live in or give money to someone in one of these states, you may owe state gift tax even if you owe no federal tax. State rules vary widely. Connecticut's annual exclusion is $17,000 in 2024; Delaware's is $12,000. Check your state's tax department website or ask a tax professional if you live in or frequently give to recipients in a state with a gift tax.

Gifts to minors and custodial accounts have their own rules

You can give up to $18,000 per year to a minor with no tax consequence. If you want to give more and have the money managed for the child until they reach adulthood, you can use a custodial account (also called a Uniform Transfers to Minors Act account, or UTMA). Contributions to a custodial account count as gifts and are subject to the same $18,000 annual exclusion.

A 529 education savings plan lets you give up to $18,000 per year per beneficiary without gift tax. Some states let you "superfund" a 529 by giving five years' worth of exclusions ($90,000) in one year, but this requires filing Form 709 and careful planning. If you plan to use a 529, consult a tax professional or financial advisor about the rules in your state.

Frequently Asked Questions

Do I owe tax if I give someone $20,000 in one year?

No. You file Form 709 to report the $2,000 overage, but you owe no federal tax. The $2,000 counts against your $13.61 million lifetime exemption. You only owe tax if your total lifetime gifts and estate exceed $13.61 million.

Can I give $18,000 to the same person every year without filing anything?

Yes. The annual exclusion resets every January 1. You can give $18,000 to one person on December 31 and another $18,000 on January 1 without filing a return either time, because each gift falls within a separate year's exclusion.

What if I give someone money but call it a loan?

If there is no written promissory note with a real interest rate and a repayment schedule, the IRS will treat it as a gift regardless of what you call it. If you intend a transfer to be a loan, document it in writing with terms. Consult a tax professional to make sure the interest rate meets IRS minimums.

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

No. Gifts under the annual exclusion require no filing and no reporting. You only file Form 709 if you give more than $18,000 to one person in a calendar year, or if you and your spouse elect gift splitting.

Does my state have a gift tax?

Only Connecticut, Delaware, Illinois, Louisiana, Mississippi, North Carolina, and Tennessee have state gift taxes. If you live in or give to someone in one of these states, check that state's tax department website for current rules and exclusion amounts.