The federal gift tax annual exclusion for 2024

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

The $18,000 limit applies to each person you give money to. If you are married, your spouse can also give $18,000 to the same person in the same year, for a combined $36,000, without either of you filing a return. The exclusion amount changes most years — it was $17,000 in 2023 and $16,000 in 2022 — so check the IRS website for the current year before making large gifts.

This rule applies to gifts of cash, property, investments, or anything else of value. It does not matter whether the recipient is a family member, a friend, or a stranger. The only exception is gifts to your spouse who is a U.S. citizen, which have no limit.

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.
  • If you are married, both spouses can each give $18,000 to the same person, totaling $36,000, without either filing a return.
  • Gifts to a spouse who is a U.S. citizen have no dollar limit and never require a return.
  • Gifts that exceed the annual exclusion do not automatically trigger a tax bill — they count against your lifetime exemption, which is currently $13.61 million per person.
  • Certain gifts are never counted: tuition paid directly to a school, medical expenses paid directly to a provider, and gifts to political organizations.

What happens if you give more than the annual exclusion

If you give more than $18,000 to one person in one year, you file Form 709 to report the excess. Filing the form does not mean you owe tax right away. Instead, the excess counts against your lifetime gift and estate tax exemption, which is $13.61 million per person in 2024.

Most people never pay gift tax because the lifetime exemption is so large. You would have to give away (or leave behind at death) more than $13.61 million total before owing any federal tax. However, the exemption amount is set to drop to roughly $7 million per person on January 1, 2026, unless Congress changes the law. If you plan to give away very large amounts, timing matters.

Some states also tax gifts, though most do not. Check your state's tax rules if you live in Connecticut, Delaware, Illinois, Louisiana, Mississippi, New York, North Carolina, or Tennessee, as these states have had gift or estate taxes in recent years. Rules change, so verify the current status with your state's revenue department.

Gifts that do not count toward the limit

Certain gifts are completely excluded from the annual limit and do not require a return. The most common are tuition and medical expenses paid directly to the provider on behalf of someone else. If you pay a university or a hospital directly, that payment does not count as a gift, no matter how large. You must pay the institution itself — giving money to the student or patient to pay the bill counts as a regular gift.

Gifts to political organizations, campaigns, and candidates are also unlimited and do not count. Gifts to charities that are registered with the IRS as 501(c)(3) organizations are unlimited as well and may be tax-deductible on your income tax return (a separate benefit from the gift tax rules).

Gifts to your spouse who is a U.S. citizen have no limit and never require a return. If your spouse is not a U.S. citizen, the annual exclusion is higher ($185,000 in 2024) but still applies.

How to document and report gifts

If your gifts stay under $18,000 per person per year, you do not need to file anything or keep special records. The IRS does not require you to report gifts under the annual exclusion. However, if you give more than $18,000 to one person in one year, you must file Form 709 with your tax return for that year, even if you do not owe tax.

Keep a record of large gifts anyway, especially if you are close to the annual limit. Write down the date, the amount, who received it, and what it was for. If the IRS ever questions a transaction, you will have proof that it was a gift and not income to the recipient or a loan you expected to be repaid.

If you give a loan instead of a gift, different rules explore. A loan must have a written agreement, an interest rate at least as high as the IRS minimum (called the applicable federal rate, or AFR), and a repayment schedule. If you do not charge interest or have no written agreement, the IRS may treat it as a gift anyway, and the excess over $18,000 counts against your lifetime exemption.

Gifts to minors and trusts

Gifts to children or grandchildren under age 18 follow the same $18,000 annual exclusion rule. However, there are restrictions on how the money can be used. If you give money directly to a minor, they legally own it, and you cannot control how they spend it once they reach the age of majority (usually 18 or 21, depending on your state).

Many parents and grandparents use a custodial account (also called an UTMA or UGMA account) or a trust to give money to minors while keeping some control. These tools let you set conditions — for example, the money can only be used for education or health care — and delay when the child gets full access. Gifts to a custodial account still count toward the $18,000 annual exclusion, but the structure protects the money until the child is older.

If you set up a trust to hold gifts for a minor, the rules become more complex. Some trusts allow the annual exclusion to explore; others do not. Consult a tax professional or estate attorney if you plan to use a trust for gifts to children.

State gift tax rules

Most states do not tax gifts at all. However, a few states have their own gift tax or estate tax that may affect large gifts. Connecticut, Delaware, Illinois, Louisiana, Mississippi, New York, North Carolina, and Tennessee have had these taxes, though the rules and rates vary and change over time.

If you live in or give to someone in one of these states, check the state's revenue or tax department website for current rules. Some state taxes have annual exclusions similar to the federal rule; others do not. A few states tax gifts only at death (as part of the estate tax), not during your lifetime.

If you are a resident of one state but give to someone in another, the rules of your home state usually explore. However, if you move to a different state, the new state's rules take effect on your move date.

Planning for large gifts and the 2026 exemption change

The federal lifetime gift and estate tax exemption is scheduled to drop from $13.61 million to roughly $7 million per person on January 1, 2026, unless Congress extends the current law. If you plan to give away large amounts of money or property, the timing of those gifts can affect how much tax your estate may owe later.

Some people use their full exemption before 2026 by making large gifts now, while the exemption is high. This strategy is called "exemption planning" and can save your heirs significant tax if you have a large estate. However, it requires careful calculation and often involves trusts or other legal structures.

If you have a net worth above $7 million or expect to, talk to an estate planning attorney or tax professional about whether making gifts before 2026 makes sense for your situation. They can help you understand the trade-offs and set up the right structure.

Frequently Asked Questions

Can I give my child $50,000 in one year without paying tax?

You can give $50,000 without owing tax, but you must file Form 709 to report it. The $32,000 over the $18,000 annual exclusion counts against your $13.61 million lifetime exemption. Unless you give away more than $13.61 million total in your lifetime, you will not owe any tax.

Does my child have to pay tax on a gift I give them?

No. The person who receives a gift does not pay income tax on it. Only the person who gives the gift files a return if the amount exceeds the annual exclusion. The recipient never owes tax on the gift itself.

If I give my spouse money, do I need to file a return?

No. Gifts to a spouse who is a U.S. citizen are unlimited and never require a return, no matter the amount. If your spouse is not a U.S. citizen, the annual exclusion is $185,000 in 2024, and you must file a return if you exceed it.

What if I give someone money but call it a loan?

If there is no written agreement, no interest rate, and no repayment schedule, the IRS will treat it as a gift, not a loan. A real loan must have all three elements, and the interest rate must meet the IRS minimum (the applicable federal rate). If you want to lend money interest-free, put the agreement in writing anyway to show your intent.

Does paying someone's medical bill count as a gift?

No, if you pay the medical provider directly. Paying a hospital, doctor, or other health care provider on behalf of someone else does not count as a gift and has no limit. However, if you give the person money to pay the bill themselves, it counts as a regular gift and counts toward the $18,000 annual exclusion.