The federal gift tax threshold 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 with the IRS, even if you do not owe tax.

The $18,000 limit applies to each recipient 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 triggering a filing requirement. The limit resets on January 1 each year.

If you are married, your spouse can also give $18,000 to each person. This means a married couple can give $36,000 to one person annually without filing. This is called gift splitting, and both spouses must agree to it on the tax return.

Key Takeaways

  • The annual gift tax exclusion is $18,000 per recipient per year in 2024, and you do not owe tax on gifts within this limit.
  • Gifts above $18,000 to one person require you to file Form 709, but you still may not owe tax if you have not used your lifetime exemption.
  • Married couples can each give $18,000 to the same person, totaling $36,000 annually, if they file a gift tax return together.
  • Certain gifts are never taxed, including direct payments to schools for tuition and direct payments to medical providers for healthcare.
  • The annual exclusion amount changes most years based on inflation, so the limit may be different in future years.

What happens when you exceed the annual limit

If you give more than $18,000 to one person in a single year, you file Form 709 to report the excess. The excess amount does not disappear—it counts against your lifetime exemption, which is $13.61 million in 2024. You do not owe tax unless you have already used up your lifetime exemption through previous large gifts or a large estate.

Most people never reach the lifetime exemption, so filing Form 709 is usually a paperwork requirement, not a tax bill. The form tells the IRS you made a large gift and how much of your lifetime exemption you used. If you die before using your full exemption, your heirs inherit the unused amount.

State gift taxes work differently. Some states have their own gift tax with lower limits, while others have no gift tax at all. Check your state's tax rules separately, because federal and state rules do not always match.

Gifts that do not count toward the limit

Certain gifts are never taxed and never count toward your annual exclusion. Direct tuition payments are unlimited—you can pay a school or university directly for someone's tuition with no tax consequences, even if the amount is very large. The payment must go straight to the school, not to the student.

Direct medical payments work the same way. You can pay a doctor, hospital, or healthcare provider directly for someone's medical bills with no limit and no tax filing. Again, the payment must go to the provider, not to the person receiving care.

Gifts to your spouse are never taxed if your spouse is a U.S. citizen. Gifts to a spouse who is not a U.S. citizen have a higher annual limit ($185,000 in 2024) but are still not taxed. Gifts to charities are also never taxed as long as the charity is a may have access to organization.

How the annual exclusion changes year to year

The IRS adjusts the annual exclusion amount for inflation, usually in $1,000 increments. In 2023, the limit was $17,000. In 2024, it rose to $18,000. The adjustment happens automatically based on a formula tied to the Consumer Price Index.

You do not need to track these changes yourself—the IRS publishes the new limit each October for the following year. If you plan to make large gifts, check the current year's limit before you give the money. A gift that is under the limit one year might be over the limit the next year if the exclusion drops (though this is rare).

Gifts to minors and trusts

Gifts to children under 18 follow the same $18,000 annual limit. However, if you want to give money to a minor and have it managed until they reach adulthood, you have options that affect how the gift is treated. A direct gift to a child counts toward the annual exclusion when ready.

If you put money in a trust for a minor, the rules are more complex. A Crummey trust allows the beneficiary to withdraw the gift within a certain period, which can preserve the annual exclusion. A standard trust that does not allow withdrawals may not may have access to for the annual exclusion, meaning the entire gift counts against your lifetime exemption.

For most families, a direct gift to a minor or a custodial account (like an UTMA or UGMA account) is simpler and still qualifies for the annual exclusion. Speak with a tax professional if you are setting up a trust and want to understand how gifts will be treated.

Loans versus gifts

A loan is not a gift, so it does not count toward the annual exclusion—but only if it is a real loan. The IRS requires a written promissory note, a stated interest rate, and a repayment schedule. If you lend money to a family member without these elements, the IRS may treat it as a gift instead.

The interest rate must be at least as high as the IRS's Applicable Federal Rate (AFR), which changes monthly. In 2024, the AFR ranges from about 5% to 6% depending on the loan term. If you charge no interest or an interest rate below the AFR, the difference between what you charged and what you should have charged is treated as a gift.

Forgiveness of a loan is treated as a gift at the time you forgive it. If you lend $50,000 to your child and later forgive the debt, that forgiveness counts as a gift and may trigger a filing requirement or use your lifetime exemption.

Frequently Asked Questions

Do I owe taxes on gifts I receive?

No. The person who gives the gift is responsible for any tax consequences, not the recipient. You can receive unlimited gifts with no tax impact on your side. The giver must file Form 709 if they exceed the annual limit, but you do nothing.

What if I give someone $20,000 in one year—do I owe tax?

You do not owe tax, but you must file Form 709 to report the $2,000 excess. That $2,000 counts against your $13.61 million lifetime exemption. Unless you have already used most of your lifetime exemption through other large gifts, you will not owe any tax.

Can I split a gift with my spouse if we are not married?

No. Gift splitting is only available to married couples. Unmarried partners cannot combine their annual exclusions. Each person has their own $18,000 limit per recipient per year.

Does paying someone's rent or mortgage count as a gift?

Yes, unless you have a written loan agreement with an interest rate at least equal to the IRS's Applicable Federal Rate. A direct payment to a landlord or lender for someone else's housing is treated as a gift and counts toward the annual exclusion.

What if I give money to a charity—does that count toward my limit?

No. Gifts to may have access to charities are never taxed and never count toward your annual exclusion. Make sure the organization is a may have access to charity by checking the IRS's Tax Exempt Organization Search tool before you give.