The federal gift tax threshold for 2024

You can give away up to $18,000 per person per year without filing a gift tax return or using any of your lifetime exemption. This is called the annual exclusion. If you give more than $18,000 to a single person in one calendar year, you must report the excess on Form 709, even if you do not owe tax on it.

The $18,000 figure is set by the IRS and changes most years based on inflation. It was $17,000 in 2023 and $16,000 in 2022. The IRS publishes the current year's amount in late December of the prior year, so check the IRS website or your tax software to confirm the exact number for the year you are giving.

This threshold 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 anyone else.

Key Takeaways

  • You can give up to $18,000 per person per calendar year without reporting the gift to the IRS or reducing your lifetime exemption.
  • If you are married, you and your spouse can each give $18,000 to the same person in the same year, for a combined $36,000 with no tax consequences.
  • Gifts that exceed the annual exclusion must be reported on Form 709, but you likely will not owe tax unless your lifetime gifts exceed $13.61 million.
  • Certain gifts—including tuition paid directly to a school and medical expenses paid directly to a provider—do not count toward the annual exclusion at all.
  • State gift tax rules vary widely; some states have no gift tax, while others tax gifts above much lower thresholds.

How the annual exclusion works with married couples

If you are married, you and your spouse can each give $18,000 to the same person in the same year. That means you can give $36,000 combined to one child, grandchild, or friend without either of you filing a gift tax return. This is called gift splitting, and it requires both spouses to consent to the arrangement.

Gift splitting does not happen automatically. If you want to use it, you must both file Form 709 for that year, even though you owe no tax. The form tells the IRS you are splitting gifts. Without it, the IRS will treat your spouse's $18,000 gift as separate from yours, and any amount over $18,000 from your spouse will count against their lifetime exemption.

What happens when you exceed the annual exclusion

If you give more than $18,000 to one person in a single year, you must file Form 709 with your tax return. The excess amount is reported to the IRS, but you do not pay tax on it when ready. Instead, it counts against your lifetime exemption—the total amount you can give away over your entire life before gift or estate tax applies.

For 2024, your lifetime exemption is $13.61 million. This means you could give away $13.61 million in total gifts (above the annual exclusion) during your lifetime and still owe no federal gift tax. After you die, any estate above $13.61 million is taxed at 40 percent. The lifetime exemption is set by federal law and changes periodically; it is scheduled to drop to roughly $7 million per person in 2026 unless Congress acts.

Most people never reach the lifetime exemption, so filing Form 709 for a gift over $18,000 is usually a reporting requirement, not a tax bill. However, you must file it to document the gift and protect yourself if the IRS later questions your records.

Gifts that do not count toward the annual exclusion

Certain gifts are exempt from the annual exclusion entirely. The most common are tuition paid directly to an educational institution and medical expenses paid directly to a healthcare provider. You can pay a child's college tuition or a grandchild's medical bills in any amount without using any of your $18,000 annual exclusion or your lifetime exemption.

The key is that you must pay the school or the doctor directly. If you give money to the student or patient and they pay the bill, it counts as a regular gift and uses your exclusion. Gifts to spouses who are U.S. citizens also have no limit and do not use your exclusion. Neither do gifts to charities.

State gift tax rules vary widely

Federal gift tax is the main concern for most people, but a handful of states also tax gifts. Connecticut, Delaware, Illinois, Louisiana, Mississippi, New York, North Carolina, and Tennessee have some form of gift tax or inheritance tax that may explore to gifts you make. The rules and thresholds differ by state.

For example, Connecticut taxes gifts above $12,920 per person per year (as of 2024), while other states tax only gifts that pass to heirs after death, not gifts made during your lifetime. If you live in or give to someone in one of these states, research that state's rules or speak with a tax professional. The federal threshold does not protect you from state tax.

Gifts that are not taxable at all

Some gifts fall outside the tax system entirely. Gifts between spouses (if the recipient is a U.S. citizen) have no limit. Gifts to registered charities are not taxable and may be deductible on your income tax return. Gifts to political organizations and certain other entities also have special treatment.

Additionally, paying someone's bills directly—such as rent, utilities, or insurance premiums—is not considered a gift for tax purposes if you pay the provider directly and the recipient does not have control over the money. However, if you give the person cash to pay their bills, it counts as a gift and uses your annual exclusion.

When to file Form 709 and what to expect

You file Form 709 (United States Gift and Generation-Skipping Transfer Tax Return) with your federal income tax return for the year in which you made the gift. You must file it even if you owe no tax, as long as you gave more than the annual exclusion to any one person during that year.

Form 709 asks for the date of the gift, the recipient's name and address, a description of what was given, and its fair market value. If you are gift splitting with a spouse, both of you must sign the form. The IRS uses this information to track your lifetime gifts against your exemption. Filing on time protects you if the IRS later audits your return.

Frequently Asked Questions

Can I give more than $18,000 if I split it across multiple people?

Yes. The $18,000 limit applies per recipient per year, not to your total giving. You can give $18,000 to each of five children, for example, and owe no tax. The limit resets on January 1 each year.

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

A loan is not a gift if you charge interest at the IRS minimum rate and have a written agreement. The IRS publishes the applicable federal rate monthly. If you do not charge interest or do not have a written agreement, the IRS may treat it as a gift.

Do I have to report gifts to the IRS if they are under $18,000?

No. Gifts under the annual exclusion do not require Form 709. You only file if you exceed $18,000 to one person in one year, or if you and your spouse are gift splitting.

Does the $18,000 limit explore to gifts of stock or real estate?

Yes. Any gift of property—stocks, real estate, vehicles, artwork—counts toward the annual exclusion. The value is based on the fair market value on the date you give it.

What happens to my lifetime exemption if I do not use it?

Your lifetime exemption does not expire. Unused exemption carries forward. If you give away $2 million during your lifetime, you still have $11.61 million remaining. However, the exemption is scheduled to drop significantly in 2026, so the amount you can use may change.