The federal gift tax threshold for 2024
You can give someone up to $18,000 per year without triggering federal gift tax reporting. 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 a gift tax return (Form 709) with the IRS, even if you do not owe tax.
The $18,000 limit applies to each person you give money to. If you are married and your spouse joins in the gift, you can give $36,000 per person per year without filing. The amount resets on January 1 each year.
This threshold changes periodically. The IRS adjusts it for inflation, usually in $1,000 increments. For 2023 the limit was $17,000; for 2025 it will likely increase again. Check the IRS website or a tax professional if you are planning large gifts in future years.
Key Takeaways
- You can give $18,000 per person per year in 2024 without filing a gift tax return with the IRS.
- If you are married, you and your spouse can each give $18,000 to the same person, totaling $36,000 per year without filing.
- Gifts above the annual limit require you to file Form 709, but you typically owe no tax unless your lifetime gifts exceed $13.61 million.
- Certain gifts are never counted against the limit: tuition paid directly to a school, medical expenses paid directly to a provider, and gifts to your spouse.
- The annual exclusion amount changes with inflation and should be verified each year before making large gifts.
What counts as a gift for tax purposes
The IRS defines a gift as a transfer of money or property where you receive nothing of value in return. If you lend money to someone and they promise to repay it, that is not a gift — it is a loan. If you pay for someone's dinner because you want to, that is a gift. If you split a restaurant bill, neither person has made a gift.
Gifts include cash, checks, stocks, real estate, vehicles, jewelry, and artwork. They also include forgiving a debt: if someone owes you $5,000 and you tell them you will not collect it, that forgiveness counts as a $5,000 gift for tax purposes.
The value of the gift is what it was worth on the date you gave it. If you give someone stock worth $15,000 on the day of transfer, that $15,000 counts toward your annual limit, even if the stock is worth more or less later.
Gifts that do not count against the annual limit
Some gifts are exempt from the annual exclusion entirely. Tuition paid directly to a school does not count, no matter the amount. You can pay $100,000 in tuition for your grandchild's college and it will not use any of your $18,000 annual exclusion. The payment must go directly to the educational institution, not to the student.
Medical expenses paid directly to a provider are also exempt. If you pay $50,000 directly to a hospital for your parent's surgery, that does not count as a gift. Again, the payment must go to the provider, not reimbursed to the person receiving care.
Gifts to your spouse are unlimited and never count against the annual exclusion, as long as your spouse is a U.S. citizen. Gifts to political organizations and charities also do not count. Gifts to your spouse who is not a U.S. citizen have a separate, higher limit of $185,000 for 2024.
What happens if you exceed the annual limit
If you give more than $18,000 to one person in 2024, you must file Form 709 (Gift Tax Return) with your federal tax return. Filing this form does not mean you owe tax. Instead, the excess amount is subtracted from your lifetime gift and estate tax exemption.
For 2024, your lifetime exemption is $13.61 million. This means you can give away up to $13.61 million over your entire life before owing any federal gift tax. If you give $25,000 to your child in one year, the $7,000 excess reduces your lifetime exemption to $13.603 million. You still owe no tax, but you have used up some of your exemption.
Most people never reach the $13.61 million lifetime limit, so they never actually pay gift tax. The filing requirement exists to track cumulative gifts. If you do not file Form 709 when required, the IRS may assess penalties, so it is important to file even if you owe no tax.
Gifts to spouses and charitable organizations
Gifts to your spouse who is a U.S. citizen have no limit. You can give your spouse $1 million, $10 million, or any amount, and none of it counts against your annual exclusion or lifetime exemption. This is called the unlimited marital deduction.
If your spouse is not a U.S. citizen, gifts are limited to $185,000 per year (for 2024). Amounts above that require filing Form 709 and reduce your lifetime exemption.
Gifts to may have access to charities and political organizations are also unlimited and do not count against your exclusion. If you donate $100,000 to a nonprofit, that does not use any of your $18,000 annual limit. The organization must be registered with the IRS as a may have access to charity for this to apply.
State gift tax rules
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 change frequently.
If you live in or are giving to someone in one of these states, check your state's tax authority website or consult a tax professional. State gift tax thresholds are usually lower than the federal limit, and state rules do not follow federal exemptions.
For most readers, federal gift tax is the only concern. State gift tax affects a small number of people in specific states.
Documenting gifts and keeping records
You do not need to tell the IRS about gifts under $18,000 per person per year. You do not need a receipt or written agreement. However, keeping your own records is wise if you give large amounts or multiple gifts to the same person over time.
If you file Form 709 because you exceeded the annual limit, keep documentation showing the date, amount, and recipient of the gift. If you gave property instead of cash, keep records of its value on the date of the gift. A simple spreadsheet or list is sufficient for your own records.
If the IRS ever questions your gifts, you will need to show when and to whom you gave money. A cancelled check, bank transfer record, or written note from you and the recipient can all serve as proof.
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 or report them to the IRS. You can give as many people as you want up to $18,000 each without filing anything. Only gifts above $18,000 to a single person in one year trigger a filing requirement.
If I give someone $20,000, do I owe tax?
No. You do not owe federal gift tax. You must file Form 709 to report the $2,000 excess, but that $2,000 simply reduces your $13.61 million lifetime exemption. Unless you give away more than $13.61 million in your lifetime, you will never pay federal gift tax. Most people never reach that threshold.
Can I split a large gift across two years to avoid filing?
Yes. If you want to give someone $30,000, you can give $18,000 in December 2024 and $12,000 in January 2025. Each year's gift stays within the annual limit, and you do not have to file Form 709. However, you cannot retroactively split a gift you already made in one year.
Does a loan to a family member count as a gift?
Only if there is no written agreement to repay it. If you lend money with the expectation of repayment and a signed promissory note, it is a loan, not a gift. If you later forgive the loan, that forgiveness counts as a gift at the time you forgive it. Without a written agreement, the IRS may treat any large transfer as a gift.
What if my spouse and I give money together?
You can each give $18,000 to the same person in the same year, totaling $36,000, without either of you filing Form 709. This is called "splitting" the gift. Both spouses must agree to split, and you should keep records showing that both of you intended to make the gift. If only one spouse has the money, the other spouse can still be treated as a co-giver if you document it properly.