The federal gift tax annual limit for 2024

You can give up to $18,000 per person per year without filing a gift tax return with the IRS. This is called the annual exclusion. If you give more than $18,000 to one person in a single year, you must file Form 709 with the IRS, even if you do not owe tax.

The $18,000 limit applies to each person you give money to. You can give $18,000 to your child, $18,000 to your spouse, $18,000 to a friend, and $18,000 to a grandchild all in the same year without filing. What matters is the amount per recipient, not the total you give away.

This limit 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 $19,000, though the IRS has not yet announced the final figure. Check the IRS website for the current year's limit before you give large amounts.

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 your spouse who is a U.S. citizen have no limit at all, and gifts to charity are also unlimited.
  • If you give more than $18,000 to one person in a year, you file Form 709 but usually owe no tax unless you have already used your lifetime exemption.
  • Paying someone's tuition or medical bills directly to the provider does not count toward the $18,000 limit, even if the amounts are large.
  • The annual limit is separate from your lifetime exemption of $13.61 million, which protects most people from ever paying gift tax.

Gifts that do not count toward the limit

Certain gifts are exempt from the annual limit entirely. If you pay a doctor, hospital, or school directly for someone else's medical care or tuition, that payment does not count. You can pay $100,000 for your grandchild's college tuition and $50,000 for your parent's surgery in the same year without filing a return, as long as you pay the provider directly.

Gifts to your spouse who is a U.S. citizen also have no limit. You can give your spouse any amount without filing. Gifts to charities registered with the IRS have no limit either. Political donations do have limits, but they are enforced by the Federal Election Commission, not the IRS gift tax rules.

Gifts of future interest — such as the right to use a vacation home starting next year — are treated differently and usually do count toward the limit. Gifts of present interest, where the person can use or enjoy the money right now, are what the $18,000 exemption covers.

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

If you give $25,000 to your child in one year, you must file Form 709 with your tax return. The excess $7,000 does not disappear. Instead, it counts against your lifetime exemption, which is $13.61 million for 2024. Most people never reach this limit in their lifetime, so filing the form does not mean you owe tax.

Filing Form 709 is a reporting requirement, not a tax bill. You complete the form, attach it to your tax return, and send it to the IRS. The form tells the IRS that you made a large gift and that you are using part of your lifetime exemption. You do not send money with the form unless you actually owe gift tax, which is rare for most people.

If you are married, your spouse can also give $18,000 to the same person in the same year. This is called gift splitting. Together you can give $36,000 to one person without either of you filing a return. To use gift splitting, both spouses must agree and file Form 709 if the total from both of you exceeds $18,000 per person.

State gift taxes and other rules

A handful of states have their own gift taxes separate from the federal tax. North Carolina, Tennessee, and a few others tax gifts above certain amounts. If you live in one of these states, you may owe state tax even if you do not owe federal tax. Check your state's tax agency website to learn whether your state taxes gifts.

The federal gift tax and the estate tax share the same lifetime exemption. If you use $5 million of your lifetime exemption by giving large gifts now, you have $8.61 million left to protect your estate when you die. This matters only if your total assets are very large — the exemption is so high that most estates never owe tax.

Loans are not gifts, even if you never ask for the money back. If you want to lend money to family without it counting as a gift, the IRS requires you to charge interest at a minimum rate set each month. For 2024, that rate is between 5 and 6 percent depending on the loan term. A written promissory note protects both you and the borrower.

Gifts to minors and trusts

You can give money directly to a minor, and it still counts as a gift under the $18,000 annual limit. However, minors cannot legally control large sums of money. If you want to give more than a small amount to a child, you can set up a custodial account under the Uniform Transfers to Minors Act (UTMA) or a trust.

A custodial account lets you name an adult custodian to manage the money until the child reaches age 18 or 21, depending on your state. The gift still counts toward your $18,000 annual limit, but the custodian controls how the money is spent. Setting up a custodial account costs nothing and takes a few minutes at most banks.

A trust is more complex and usually costs money to set up, but it gives you more control over when and how the money is used. A trust can specify that the money is spent only on education, or that it is held until the child turns 30. If you are giving a large amount or want detailed control, a trust may be worth the cost. A lawyer who handles estate planning can explain your options.

How the annual limit resets

The $18,000 limit is per calendar year. If you give $18,000 to your child on December 31, you can give another $18,000 on January 1 without filing a return. The clock resets at midnight on December 31 each year. This is different from a rolling 12-month period — it is strictly calendar-year based.

If you give $20,000 in January and want to give more later in the year, you have already used $18,000 of your annual limit. The remaining $2,000 of the $20,000 gift counts against your lifetime exemption. You cannot "undo" a gift or move it to the next year to avoid filing Form 709.

Married couples can coordinate their giving to maximize the annual limit. If both spouses give $18,000 to the same person, that person receives $36,000 total without either spouse filing a return. Planning gifts across two spouses and multiple recipients can reduce the number of Form 709s you file.

Frequently Asked Questions

Do I have to report gifts under $18,000?

No. Gifts under $18,000 per person per year do not require you to file Form 709. You can give as many gifts as you want under that threshold without reporting them. The IRS does not track small gifts.

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

Yes. The $18,000 limit is per person per year. You can give $18,000 to ten different people in the same year and file no return. What triggers filing is giving more than $18,000 to a single person in a single calendar year.

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

If it was a loan, it is not a gift. You should have a written agreement stating the loan amount, interest rate, and repayment terms. Without a written agreement, the IRS may treat it as a gift. If you forgive the loan later, that forgiveness counts as a gift in the year you forgive it.

Does paying my child's rent count as a gift?

Yes, if you give money to your child and they use it for rent, that is a gift that counts toward your $18,000 annual limit. However, if you pay the landlord directly for your child's rent, some tax professionals argue it is a payment for services rather than a gift to your child. The IRS position is unclear, so keep records of what you paid and to whom.

Can I give away my entire savings without owing gift tax?

You can give away large amounts over time without owing tax, as long as you spread the gifts across multiple years and multiple people. If you give $100,000 to one person in one year, you file Form 709 and use $82,000 of your lifetime exemption, but you owe no tax. You only owe tax if your total lifetime gifts exceed $13.61 million, which is rare.