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 with the IRS. This amount is called the annual exclusion. If you give more than this to any one person in a calendar year, you must file Form 709 (Gift Tax Return) with your tax return, even if you owe no tax.

The annual exclusion amount changes most years. The IRS adjusts it for inflation in $1,000 increments. For 2023 it was $17,000; for 2024 it is $18,000. Check the IRS website or your tax software each January to confirm the current year's limit.

This limit applies to each person you give to. You can give $18,000 to your daughter, $18,000 to your son, $18,000 to a friend, and so on, all in the same year, without filing. But if you give $20,000 to one person, you must report the extra $2,000.

Key Takeaways

  • You can give $18,000 per person per year (in 2024) without filing a gift tax return, and this limit resets on January 1 each year.
  • Gifts to spouses and to charities do not count toward the annual limit, so you can give unlimited amounts to them.
  • If you give more than the annual limit to one person, you must file Form 709, but you likely owe no tax unless you have already used your lifetime exemption.
  • Married couples can combine their exclusions, so together you can give $36,000 per person per year without filing.
  • The annual exclusion and lifetime exemption are separate — exceeding the annual limit does not immediately trigger a tax bill, but it does use up your lifetime room.

What counts as a gift and what does not

A gift is money or property you give to someone with no expectation of repayment. Tuition paid directly to a school, medical expenses paid directly to a provider, and gifts to spouses do not count toward your annual limit, even if they are large amounts.

Loans do count as gifts if you do not charge interest or if the interest rate is below the IRS minimum (called the Applicable Federal Rate, or AFR). If you lend money to a family member at no interest, the IRS may treat it as a gift. To avoid this, use a written promissory note and charge at least the AFR rate, which changes monthly.

Paying someone's mortgage, credit card bill, or rent counts as a gift. Giving a car, stock, or real estate also counts. The value is what the property is worth on the date you give it, not what you paid for it.

Married couples and the annual exclusion

If you are married and file jointly, you and your spouse can each give $18,000 to the same person in the same year. That means together you can give $36,000 to one person without filing. This is called gift splitting.

To use gift splitting, both spouses must consent. If only one spouse gives the money but you want to split it, you must file Form 709 to elect splitting, even if the total is under the limit. If you are not married or do not file jointly, you cannot split gifts.

Exceeding the annual limit and the lifetime exemption

If you give more than $18,000 to one person in one year, you must file Form 709. The amount over the limit does not disappear — it counts against your lifetime exemption, which is currently $13.61 million per person (for 2024).

This means if you give $25,000 to your daughter in 2024, you file Form 709 to report the $7,000 overage. You owe no gift tax now, but that $7,000 reduces the amount you can pass on tax-free when you die. Most people never use their full lifetime exemption, so exceeding the annual limit is usually not a tax problem during life.

The lifetime exemption is scheduled to drop to about $7 million per person on January 1, 2026, unless Congress changes the law. This is important if you are planning large gifts in the next few years.

Gifts to spouses and charities

You can give unlimited amounts to your spouse with no annual limit and no filing requirement, 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.

Gifts to may have access to charities also have no limit. You can give any amount to a charity and deduct it on your tax return (if you itemize deductions). These gifts do not count toward your annual exclusion or lifetime exemption.

Reporting gifts on your tax return

If you stay within the annual exclusion, you do not report the gift anywhere on your personal tax return. You simply do not file Form 709. The IRS does not require you to tell them about gifts under the limit.

If you exceed the annual limit, file Form 709 with your tax return by April 15 of the following year (or October 15 if you file an extension). Form 709 is available on the IRS website. You can file it yourself or have a tax preparer do it. Filing does not mean you owe tax — it just documents the overage for IRS records.

State gift taxes

Most states do not have a gift tax. A few states — Connecticut, Delaware, Louisiana, Mississippi, North Carolina, and Tennessee — have or had gift taxes, but most have repealed them or do not enforce them. Check your state's tax agency website if you live in one of these states.

Even if your state has no gift tax, you must still follow federal rules and file Form 709 if you exceed the federal annual exclusion.

Frequently Asked Questions

Do I have to report gifts I receive?

No. The person who receives a gift does not report it on their tax return or file any form. Gift tax is the responsibility of the person who gives the gift. You can receive unlimited gifts with no tax consequence to you.

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

If repayment is expected and documented, it is a loan, not a gift, and the annual exclusion does not apply. Use a written promissory note stating the loan amount, repayment terms, and interest rate (at least the IRS Applicable Federal Rate). Without a note, the IRS may treat it as a gift.

Can I give money to my adult children for a down payment on a house?

Yes. You can give up to $18,000 per child per year without filing. If you give more, file Form 709 but owe no tax unless you have already used your lifetime exemption. Many parents give $18,000 to each adult child every year as a strategy to move money to the next generation tax-free.

Does paying for my grandchild's college tuition count as a gift?

No, if you pay the tuition directly to the school. Tuition paid directly to an educational institution is not subject to the annual exclusion limit. However, if you give money to your grandchild and they pay tuition, that counts as a gift and is subject to the limit.

What happens if I file Form 709 but owe no tax?

Filing Form 709 with no tax owed is common and not a problem. It simply documents that you exceeded the annual exclusion and used part of your lifetime exemption. The IRS tracks this for estate tax purposes when you die, but you owe no tax during your life unless you have already used your full $13.61 million lifetime exemption.