The federal gift tax annual exclusion lets you give up to $18,000 per person per year without filing a gift tax return

The annual exclusion is the amount you can give to any one person in a calendar year without triggering a gift tax return or reducing your lifetime exemption. For 2024, that amount is $18,000 per recipient. If you give more than $18,000 to a single person in one year, you must file Form 709 (Gift Tax Return) with the IRS, even if you owe no tax.

The exclusion resets on January 1 each year. You can give $18,000 to one person on December 31 and another $18,000 to that same person on January 1 without triggering tax consequences. The exclusion 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.

If you are married, both spouses have their own $18,000 exclusion. A married couple can give $36,000 per year to the same person without filing. This is called gift splitting, and both spouses must agree to it on the gift tax return if the gift exceeds one spouse's exclusion alone.

Key Takeaways

  • You can give $18,000 per person per year (2024) without filing a gift tax return or owing tax.
  • Married couples can give $36,000 per year to one person if both spouses agree to split the gift.
  • Gifts above the annual exclusion require filing Form 709, but you may owe no tax if you have not used your lifetime exemption.
  • Certain gifts do not count toward the exclusion: tuition paid directly to a school, medical expenses paid directly to a provider, and gifts to a spouse or charity.
  • The annual exclusion amount changes most years; the IRS announces the new figure in October for the following year.

Gifts that do not count against your annual exclusion

Some gifts are exempt from the annual exclusion entirely. If you pay tuition or medical bills directly to the school or healthcare provider on someone else's behalf, those payments do not count as gifts and do not reduce your exclusion. You can pay unlimited amounts this way without filing a return or owing tax.

Gifts to your spouse (if a U.S. citizen) and gifts to registered charities also do not count. You can give your spouse any amount of money or property without limit. Charitable donations may be tax-deductible on your income tax return, depending on the type of charity and your income.

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

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

Most people never owe gift tax because the lifetime exemption is so large. You only owe tax if your total gifts over your entire lifetime exceed the exemption amount. However, filing Form 709 is required even if you owe no tax, and failure to file can result in penalties.

The lifetime exemption and how it works

The lifetime exemption is a separate pool of money you can give away over your entire life without owing tax. When you give a gift above the annual exclusion, the excess is deducted from this pool. For example, if you give $25,000 to one person in 2024, the $7,000 overage reduces your lifetime exemption from $13.61 million to $13.603 million.

The lifetime exemption is also used when you die. Any assets you leave in your estate above the exemption amount are subject to federal estate tax. Gifts you made during your lifetime that exceeded the annual exclusion reduce the exemption available to your estate, so large gifts can indirectly increase estate taxes owed by your heirs.

The lifetime exemption amount changes periodically. It is set by federal law and adjusted for inflation. In 2026, the exemption is scheduled to drop to roughly $7 million per person unless Congress extends the current law.

State gift taxes and rules that vary by location

Federal gift tax is separate from state gift tax. Most states do not have a gift tax, but a few do. Connecticut, Delaware, Louisiana, Mississippi, North Carolina, and Tennessee have estate taxes that can affect large gifts or inheritances, though the rules differ from federal law.

Some states also have different annual exclusion amounts or lifetime exemptions. If you live in or give money to someone in a state with a gift or estate tax, you may need to file additional forms or follow different rules. Check your state's tax authority website or speak with a tax professional if you are making large gifts and live in or give to someone in a state with its own tax.

How the annual exclusion amount changes each year

The IRS adjusts the annual exclusion for inflation. The amount typically increases in $1,000 increments when inflation pushes it high enough. The IRS announces the new exclusion amount in October for the following calendar year.

In recent years, the exclusion has been $16,000 (2022), $17,000 (2023), and $18,000 (2024). If you are planning large gifts, check the current year's exclusion amount on the IRS website before you give. Giving just under the exclusion one year and just over it the next can affect whether you need to file a return.

Frequently Asked Questions

Do I owe tax if I give a gift above $18,000?

Not necessarily. You only owe tax if your total lifetime gifts exceed $13.61 million. Gifts above the annual exclusion reduce your lifetime exemption but do not trigger tax for most people. However, you must file Form 709 to report the gift, even if you owe no tax.

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

Yes. The $18,000 exclusion applies per recipient per year. You can give $18,000 to 10 different people in the same year without filing a return. Each person has their own $18,000 limit.

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

Yes. The annual exclusion applies to gifts of any kind: cash, stocks, real estate, vehicles, or artwork. The value of the gift is what matters. For property, you typically use the fair market value on the date you give it.

What if I give money to my adult child for a down payment on a house?

If you give your child $18,000 or less in one year, no return is required. If you give more, you must file Form 709, but you likely owe no tax. The gift does not affect your child's ability to get a mortgage, though the lender may ask where the down payment came from.

Can I avoid filing by splitting a large gift across two calendar years?

Yes. If you give $20,000 to someone on December 31 and another $20,000 on January 1, each gift falls within the annual exclusion for its respective year, and no return is required. However, you cannot split a single gift across years to avoid reporting—the date you give it determines which year it counts toward.