The federal gift tax threshold for 2024

You can give up to $18,000 per person per year without filing a gift tax return with the IRS. If you are married and file jointly, you and your spouse can each give $18,000 to the same person, meaning a couple can give $36,000 total to one recipient without reporting it. This limit resets on January 1 each year.

These numbers change annually. The IRS adjusts the threshold for inflation, usually in $1,000 increments. The $18,000 figure applies to gifts made in 2024; in 2023 it was $17,000. Check the IRS website or a tax professional if you are giving in a year other than 2024, because the threshold may have shifted.

Gifts below this threshold do not require you to file Form 709 (the gift tax return) and do not reduce the amount you can leave tax-free when you die. Staying under the limit is the simplest route and requires no paperwork on your end.

Key Takeaways

  • You can give $18,000 per person per year in 2024 without filing a gift tax return, and married couples can each give that amount to the same person.
  • Gifts above the annual threshold require you to file Form 709 with the IRS, but you still owe no tax unless you exceed your lifetime exemption of roughly $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.
  • State gift taxes exist in only a handful of states and operate independently of federal rules, so check your state's rules if you live in Connecticut, Delaware, Illinois, Louisiana, Mississippi, Nevada, North Carolina, or Pennsylvania.
  • Gifts of property (a house, stocks, artwork) are valued at fair market value on the date you give them, not what you paid for them.

What happens if you give more than the annual limit

If you give more than $18,000 to one person in a single year, you must file Form 709 with your tax return. Filing the form does not mean you owe tax when ready. Instead, the excess amount counts against your lifetime gift and estate tax exemption, which is approximately $13.61 million per person in 2024 (this figure also changes yearly with inflation).

Most people never reach that lifetime limit, so filing Form 709 is a reporting requirement, not a tax bill. You file it to document the gift and keep the IRS informed of how much of your lifetime exemption you have used. Your tax liability only arises if you give away more than $13.61 million over your lifetime and at death combined.

If you are married, you and your spouse each have your own $13.61 million exemption. A married couple can therefore give away roughly $27.22 million combined before owing any federal gift or estate tax.

Gifts that do not count against the limit at all

Certain gifts are completely exempt from the annual threshold and never require Form 709. The most common are tuition and medical expenses: if you pay a school or university directly for someone's tuition, or pay a doctor or hospital directly for someone's medical care, those payments do not count as gifts and have no limit. You must pay the provider directly — giving money to the person to pay the bill themselves does count against the limit.

Gifts to your spouse are also unlimited if your spouse is a U.S. citizen. You can give your spouse any amount without filing a return or using any of your exemption. If your spouse is not a U.S. citizen, the annual threshold is higher ($185,000 in 2024) but still applies.

Gifts to political organizations and charities registered with the IRS as 501(c)(3) organizations are unlimited and do not count against your threshold. Gifts to other types of organizations may have limits; check with the organization or a tax professional if you are unsure.

Gifts of property and how they are valued

When you give property — a house, car, stocks, artwork, or anything else with monetary value — the IRS values it at its fair market value on the date you give it. Fair market value is what a willing buyer would pay a willing seller, not what you paid for it or what you think it is worth.

For stocks and bonds, fair market value is the closing price on the date of the gift. For real estate, you typically need an appraisal. For items like jewelry, art, or collectibles, you may need a professional appraisal as well. If you give property worth more than $18,000 in a year, you must file Form 709 and report the appraised value.

One advantage of giving appreciated property (something worth more than you paid for it) is that the recipient receives a "stepped-up basis." If you give someone stock you bought for $5,000 that is now worth $20,000, they inherit your $5,000 cost basis. If they sell it when ready, they owe capital gains tax only on the difference between $20,000 and $5,000. This can be a tax-efficient way to transfer assets.

State gift taxes and where they explore

Most states do not have a gift tax. However, Connecticut, Delaware, Illinois, Louisiana, Mississippi, Nevada, North Carolina, and Pennsylvania do tax gifts in some form. These state taxes operate separately from federal rules, meaning you can be under the federal threshold but still owe state tax, or vice versa.

State thresholds and rules vary widely. Some states tie their exemption to the federal amount; others set their own. If you live in or are giving to someone in one of these states, check that state's tax authority website or consult a tax professional, because the rules differ enough that a general answer will not cover your situation.

If you are giving to someone who lives in a different state from you, the rules of your state generally explore, not the recipient's state. However, if you own property in another state and give it away, that state's rules may explore to that property.

Splitting gifts between spouses and timing across years

If you are married, you can "split" a gift with your spouse even if only one of you actually gave the money. For example, if you give $36,000 to your child, you and your spouse can each claim $18,000 of that gift, keeping you both under the annual threshold. To split gifts, you must file Form 709 and elect gift splitting on the return.

You cannot combine gifts across years to stay under the limit. If you give someone $20,000 in January and $15,000 in December of the same year, that is $35,000 in one calendar year, and you must file Form 709 for the $17,000 over the threshold. The annual limit resets on January 1, so a gift on December 31 and another on January 1 of the next year are treated as gifts in two separate years.

Some people space large gifts across multiple years to avoid filing Form 709. This is legal, but keep records of when each gift was made and to whom, because the IRS may ask for documentation if your pattern of giving looks unusual.

Loans versus gifts and documentation

If you lend money to a family member or friend, it is not a gift and does not count against the annual threshold — but only if it is a real loan. A real loan requires a written promissory note, an interest rate (even if below market rate), and a repayment schedule. Without these, the IRS may treat it as a gift.

The IRS publishes a minimum interest rate each month called the Applicable Federal Rate (AFR). If you charge less than the AFR, the difference is treated as a gift. For example, if the AFR is 5% and you charge 2%, the 3% difference is imputed as a gift. You do not owe tax on the imputed gift unless it exceeds the annual threshold, but you must report it on Form 709.

If you are making a large gift, document it in writing even if it is not required. A straightforward letter stating the date, amount, and that it is a gift can prevent misunderstandings with family members and protect you if the IRS ever questions the transaction.

Frequently Asked Questions

Do I owe taxes on gifts I receive?

No. The person who gives the gift is responsible for any tax consequences, not the recipient. You can receive any amount of gifts without owing federal income tax or filing a return. State rules vary, but most states also do not tax gifts to the recipient.

What if I give someone $20,000 in one year — do I owe tax?

You do not owe tax, but you must file Form 709 to report the $2,000 over the $18,000 threshold. That $2,000 counts against your lifetime exemption of $13.61 million. Unless you give away millions more during your lifetime, you will never owe actual tax.

Can I give my child money for a down payment on a house without it counting as a gift?

If you give the money outright, it counts as a gift and is subject to the annual threshold. If you structure it as a loan with a promissory note and interest rate, it does not count as a gift. Consult a tax professional if the amount is large, because the IRS scrutinizes family loans carefully.

Does paying someone's credit card bill count as a gift?

Yes, if you pay the bill directly to the credit card company or give money to the person to pay it. The only exception is if you pay tuition or medical expenses directly to the provider. Paying off a car loan, mortgage, or other debt counts as a gift to the person whose debt it is.

What if I want to give money to multiple people — do I get multiple $18,000 thresholds?

Yes. The $18,000 limit applies per recipient per year. You can give $18,000 to your child, $18,000 to your grandchild, $18,000 to a friend, and so on, all in the same year, without filing a return. If you are married, you and your spouse can each give $18,000 to each person.