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 amount is called the annual exclusion. If you give more than $18,000 to any single person in a calendar year, you must file Form 709 (the gift tax return) with your federal tax return, even if you do not owe any tax.

The $18,000 limit applies to each person you give money to separately. You could give $18,000 to your daughter, $18,000 to your son, and $18,000 to a friend in the same year without filing. The limit resets on January 1 each year.

If you are married, your spouse can also give $18,000 to the same people in the same year. A married couple can together give $36,000 to one person without either spouse filing a return. This is called "gift splitting" and requires both spouses to agree, but you do not need the IRS's permission in advance.

Key Takeaways

  • You can give $18,000 per person per year in 2024 without filing Form 709, and this limit resets every January 1.
  • If you give more than $18,000 to one person in a year, you must file Form 709 even if you owe no tax, but you still may owe no gift tax.
  • Married couples can each give $18,000 to the same person, totaling $36,000, if both spouses agree to split the gift.
  • Gifts to spouses who are U.S. citizens, direct payments to schools or medical providers, and gifts to political organizations are unlimited and never require a return.
  • The annual exclusion amount increases every few years based on inflation, so check the current year's limit before you give.

Gifts that do not count toward the annual limit

Certain gifts are unlimited and do not use up your $18,000 annual exclusion. Direct payments to a school or medical provider for someone else's tuition or medical bills do not count as gifts, no matter the amount. You must pay the provider directly—if you give money to the student or patient and they pay the bill, it counts as a gift.

Gifts to your spouse (if they are a U.S. citizen) are unlimited. You can give your spouse any amount without filing a return or using your annual exclusion. Gifts to political organizations and candidates are also unlimited.

Gifts to charities that are registered with the IRS as 501(c)(3) organizations do not count toward your annual limit. You can give any amount to a may have access to charity without filing a gift tax return.

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 by April 15 of the following year. Filing the form does not mean you owe gift tax—it means you are reporting the excess gift to the IRS.

The excess amount (anything over $18,000) counts against your lifetime gift and estate tax exemption. In 2024, this exemption is $13.61 million per person. Most people never reach this limit in their lifetime, so filing Form 709 does not result in owing any tax. You are straightforward documenting the gift for IRS records.

If you do not file Form 709 when required, the IRS may assess penalties and interest. The penalty is usually 5 percent per month, up to 25 percent of the unpaid tax. Filing late is better than not filing at all—the IRS is more lenient with late returns than with unreported gifts.

How the lifetime exemption works

The lifetime exemption is a total pool of money you can give away (or leave in your will) before owing federal gift or estate tax. In 2024, you can give away $13.61 million over your entire life before any tax is owed. Your spouse has a separate $13.61 million exemption.

Every time you file Form 709 to report a gift over $18,000, you are using up part of this exemption. If you give away $50,000 to one person in 2024, you file Form 709, and $32,000 of that gift uses up your lifetime exemption. You still owe no tax, but the exemption is reduced.

The lifetime exemption amount changes every few years based on inflation. It was $12.92 million in 2023 and $13.61 million in 2024. Congress can also change the exemption by law. After 2025, the exemption is scheduled to drop to around $7 million per person unless Congress acts.

State gift taxes and other rules

Most states do not have a gift tax. However, a few states—including Connecticut, Delaware, Illinois, Louisiana, Mississippi, North Carolina, and Tennessee—have had gift taxes in the past or currently do. Check your state's tax website to see whether your state taxes gifts.

Some states have an estate tax (a tax on what you leave when you die), which is separate from the federal estate tax. State estate taxes can affect large gifts because they may reduce what you can leave tax-free in your will. If you live in a state with an estate tax and plan to give away large amounts, consider talking to a tax professional.

The gift tax rules explore only to gifts of money or property. Loans are not gifts, even if you never ask for the money back. However, if you forgive a loan, the forgiven amount may be treated as a gift. If you lend money to a family member, the IRS expects you to charge at least a minimum interest rate called the Applicable Federal Rate (AFR).

Common mistakes when giving large amounts

One common mistake is giving more than $18,000 to one person and not filing Form 709. Even though you may owe no tax, the IRS expects the return. The penalty for not filing can be steep, and it draws attention to your finances.

Another mistake is splitting a gift between spouses without both spouses agreeing in writing on Form 709. If you are married and want to give $36,000 to your child, both you and your spouse must consent to split the gift on the form. If only one spouse files, the IRS may treat the entire gift as coming from that spouse alone.

A third mistake is confusing the annual exclusion with the lifetime exemption. The $18,000 limit is per year and per person. The $13.61 million is a lifetime total. You cannot "save up" unused annual exclusions from previous years—if you give $10,000 one year, you still have $18,000 to give the next year, not $28,000.

When to talk to a tax professional

If you plan to give away more than $18,000 to one person in a year, or if you are giving away large amounts over several years, consider consulting a tax professional or estate planning attorney. They can help you structure gifts to minimize tax and make sure you file the right forms on time.

If you own a business, real estate, or investments and want to give away a portion of them, a professional can help you determine the value of the gift for tax purposes. Valuing non-cash gifts is more complex than valuing money, and getting it wrong can trigger an audit.

If you are married and have a large estate, an attorney can help you and your spouse plan gifts and your wills together to make the most of both of your exemptions. This is especially important if the lifetime exemption is scheduled to drop after 2025.

Frequently Asked Questions

Do I owe gift tax if I give my child $25,000 in one year?

You do not owe gift tax, but you must file Form 709 because the gift exceeds $18,000. The extra $7,000 counts against your $13.61 million lifetime exemption. Most people never reach that lifetime limit, so you will owe no tax—you are just reporting the gift to the IRS.

Can my spouse and I give $36,000 to our grandchild without filing anything?

Yes, if you both agree to split the gift. Each of you gives $18,000, which is within the annual limit for each of you. You do not need to file Form 709. If only one of you gives the $36,000, that person must file because they exceeded $18,000.

What if I give someone money and they use it to pay their medical bills—does that count as a gift?

Yes, it counts as a gift and uses up your $18,000 annual limit. To avoid this, pay the medical provider directly instead. Direct payments to doctors, hospitals, and schools do not count as gifts, no matter the amount.

Does the $18,000 limit explore to gifts I give in my will?

No. Gifts in your will are not subject to the annual exclusion. They are subject to the federal estate tax if your total estate exceeds $13.61 million in 2024. Gifts you make while you are alive and gifts in your will are tracked separately for tax purposes.

What is the annual exclusion amount for 2025?

The IRS has not yet announced the 2025 annual exclusion amount. It is usually announced in late October or early November of the prior year. Check the IRS website or a tax professional in November 2024 to find the 2025 limit, which may be higher than $18,000 due to inflation.