The federal gift tax threshold for 2024

You can give away $18,000 per person per year without filing a gift tax return or reducing your lifetime exemption. 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 Form 709 (the gift tax return) with your tax return, even if you owe no tax.

The $18,000 limit applies to each recipient separately. You can give $18,000 to your child, $18,000 to your spouse, $18,000 to a friend, and $18,000 to another family member in the same year without triggering any tax consequences. Married couples can combine their exclusions, meaning you and your spouse together can give $36,000 per person per year.

This annual exclusion amount changes most years. The IRS adjusts it for inflation in $1,000 increments. In 2023 it was $17,000 per person; in 2025 it will likely be $19,000 or higher, though the exact figure has not yet been announced. Check the IRS website or your tax professional before making large gifts to confirm the current year's limit.

Key Takeaways

  • You can give up to $18,000 per recipient per year in 2024 without filing a gift tax return or owing any tax.
  • Married couples can give $36,000 per person per year by combining both spouses' annual exclusions.
  • Gifts above the annual limit require filing Form 709, but you still owe no tax unless you exceed your lifetime exemption of $13.61 million.
  • The annual exclusion amount changes yearly for inflation, so verify the current limit before making large gifts.
  • Certain gifts—including tuition paid directly to schools and medical expenses paid directly to providers—do not count toward the limit at all.

What happens if you give more than $18,000 in one year

If you give more than $18,000 to one person in a calendar year, you must file Form 709 with your federal tax return. Filing the form does not mean you owe tax—it straightforward reports the excess gift to the IRS. The excess amount is subtracted from your lifetime gift and estate tax exemption, which is $13.61 million for 2024.

Most people never owe gift tax because the lifetime exemption is so large. You would need to give away more than $13.61 million over your lifetime (or leave more than that in your estate when you die) before owing any federal gift tax. However, some states have their own gift taxes with much lower exemptions, so check your state's rules if you live in Connecticut, Delaware, Minnesota, New York, Oregon, Rhode Island, Tennessee, or Washington.

If you do exceed the lifetime exemption, the tax rate is 40% of the amount over the limit. This is rare for most families, but it is worth understanding if you are planning to give away substantial sums or leave a large estate.

Gifts that do not count toward the $18,000 limit

Some gifts are completely exempt from the annual limit. Tuition paid directly to a school does not count, no matter how much you pay. Similarly, medical expenses paid directly to a healthcare provider do not count. These exemptions explore only when you pay the institution directly—if you give money to the person and they pay the bill, it counts as a regular gift.

Gifts to your spouse who is a U.S. citizen are unlimited and do not count toward the annual exclusion. Gifts to political organizations and charities also do not count. If you are married and your spouse is not a U.S. citizen, the annual exclusion for gifts to them is $185,000 in 2024 (a much higher limit than the standard $18,000).

Health insurance premiums you pay on behalf of someone else do not count as gifts if you pay the insurance company directly. The same rule applies to property taxes, mortgage payments, or other bills you pay directly to the creditor on someone else's behalf—these are not considered gifts under tax law.

How to structure large gifts without filing

If you want to give a family member a large sum—say, $50,000—you can spread it across multiple years to stay under the annual limit. Give $18,000 in 2024, $18,000 in 2025, and $14,000 in 2026, and you will not file a gift tax return at all. This is a common strategy for parents helping adult children with down payments or other major expenses.

You can also use the unlimited marital deduction if you are married. If you have $50,000 to give to your child, you and your spouse can each give $25,000 in the same year without filing, because each of you has an $18,000 annual exclusion plus the ability to use part of your lifetime exemption without owing tax (you just file Form 709 to report it).

Another option is to pay tuition or medical bills directly. If your grandchild needs dental work costing $15,000, pay the dentist directly and it does not count against your annual limit at all. You could give the grandchild $18,000 in cash the same year and still be under the threshold.

State gift tax rules

Eight states have their own gift taxes: Connecticut, Delaware, Minnesota, New York, Oregon, Rhode Island, Tennessee, and Washington. These state taxes work differently from the federal tax. Some states tax gifts made during your lifetime; others tax only what you leave in your estate. The exemption amounts and rates vary widely.

New York, for example, has a lifetime gift tax exemption of $6.94 million in 2024, which is lower than the federal exemption. If you live in New York and give away more than that amount during your lifetime, you owe New York gift tax even if you do not owe federal tax. Oregon and Tennessee tax only estates, not lifetime gifts, so you can give away as much as you want during your life without owing state tax.

If you live in or are giving money to someone in one of these eight states, consult a tax professional or check your state's tax department website to understand the specific rules. The rules are complex and vary by state.

Reporting gifts on your tax return

If your gifts stay under $18,000 per person per year, you do not file anything. You straightforward make the gift and move on. The IRS does not require you to report small gifts to your tax return.

If you exceed $18,000 to one person in a year, file Form 709 (United States Gift Tax Return) with your federal tax return. You can file it electronically or on paper. The form asks for the date of the gift, the recipient's name and address, a description of what was given, and the fair market value of the gift. If you are married and both spouses are giving, you can file a joint Form 709.

Keep records of large gifts—bank statements, wire confirmations, or written agreements—in case the IRS ever asks questions. You do not need to keep records for gifts under the annual limit, but it is good practice anyway, especially if you are giving to family members and want to avoid confusion later about whether something was a loan or a gift.

Frequently Asked Questions

Can I give my child $50,000 without owing tax?

You can give $18,000 without filing anything. If you give $50,000, you must file Form 709 to report the $32,000 excess, but you will owe no tax because it comes out of your $13.61 million lifetime exemption. If you are married, you and your spouse can give $36,000 combined without filing.

Does my spouse's gift count toward my $18,000 limit?

No. Each person has their own $18,000 annual exclusion. Your spouse's gifts do not reduce your limit. If you are married, you can give $18,000 to your child and your spouse can give $18,000 to the same child in the same year, for a total of $36,000, without either of you filing a return.

What if I give someone a loan instead of a gift?

A loan is not a gift and does not count toward the annual limit, but the IRS requires you to charge interest (called the applicable federal rate, or AFR) and have a written agreement. If you lend money without interest or a written agreement, the IRS may treat it as a gift. Put the loan terms in writing to protect yourself.

Do I owe gift tax if I give money to my grandchild's 529 college savings plan?

Contributions to a 529 plan count as gifts and are subject to the $18,000 annual limit per recipient. However, 529 plans allow a special election: you can contribute up to $90,000 (five times the annual exclusion) in one year and treat it as if you spread it over five years, as long as you do not give that grandchild any other gifts during those five years. Consult a tax professional before using this strategy.

What if I give a gift and then the person gives it back to me?

A gift that is returned to you is still a gift for tax purposes. The fact that you received money back later does not erase the gift. If you are concerned about this, document the arrangement in writing as a loan instead, with interest and a repayment schedule.