The federal gift tax threshold for 2024

You can give up to $18,000 per person per year without triggering federal gift tax paperwork or owing tax on the gift. This limit is called the annual exclusion. If you give more than $18,000 to one person in a single year, you must file a gift tax return — even if you don't owe tax — and the excess counts against your lifetime exemption.

The $18,000 figure changes most years. The IRS adjusts it for inflation in $1,000 increments, so the threshold may be different in 2025 and beyond. Check the IRS website or a tax professional to confirm the current year's limit before making large gifts.

This limit applies to gifts of money, property, investments, or anything else of value. It does not explore to gifts between spouses or to payments made directly to a medical provider or school on someone else's behalf.

Key Takeaways

  • You can give $18,000 per person per year (in 2024) without filing a gift tax return or owing federal gift tax.
  • If you give more than $18,000 to one person in one year, you must file Form 709 even if no tax is due, and the excess reduces your lifetime exemption.
  • Married couples can each give $18,000 to the same person in the same year, for a combined $36,000 with no tax consequences.
  • Gifts to spouses and direct payments to medical providers or schools do not count toward the annual limit.
  • The annual exclusion amount changes yearly with inflation, so verify the current threshold before giving large amounts.

How the lifetime exemption works

If you give more than $18,000 to one person in a year, the excess does not trigger a tax bill when ready. Instead, it uses up part of your lifetime exemption — a total amount you can give away or leave behind at death without owing federal tax. For 2024, the lifetime exemption is $13.61 million per person.

Here is how it works in practice: if you give $25,000 to your daughter in 2024, you file a gift tax return reporting the $7,000 excess. That $7,000 reduces your lifetime exemption from $13.61 million to $13.603 million. You owe no tax now. When you die, your estate uses what remains of your exemption to shelter assets from estate tax.

Most people never use up their lifetime exemption because it is very large. But if you make substantial gifts over many years, or if you leave behind a large estate, the exemption matters. A tax professional can help you track cumulative gifts if you are giving significant amounts.

Gifts between spouses have no limit

You can give your spouse any amount of money or property at any time without any tax consequence, as long as your spouse is a U.S. citizen. This is called the unlimited marital deduction. No gift tax return is required, and the gift does not reduce your lifetime exemption.

If your spouse is not a U.S. citizen, the rule is different. You can give up to $185,000 per year (in 2024) without filing a return or owing tax. This limit also adjusts yearly for inflation. Consult a tax professional if you are married to a non-citizen spouse and plan to give substantial gifts.

Payments to schools and medical providers

If you pay a doctor, hospital, or school directly on behalf of someone else, that payment does not count as a taxable gift and does not use up your annual exclusion. You can pay unlimited amounts this way without filing a return or owing tax.

The key requirement is that you pay the provider directly — not the person receiving the care or education. If you give money to your grandchild and they pay the tuition bill, that counts as a gift to them and uses your $18,000 annual limit. If you write the check to the school, it does not.

This rule applies to any medical care: surgery, dental work, therapy, prescription drugs, or long-term care. It also applies to tuition and fees at any school, from kindergarten through graduate programs. Room and board at college does not may have access to — only direct educational expenses.

What happens when you exceed the limit

If you give more than $18,000 to one person in one year, you must file Form 709 (the U.S. Gift Tax Return) with your federal tax return by April 15 of the following year. You file this form even if you owe no tax.

Filing the form does three things: it reports the gift to the IRS, it documents how much of your lifetime exemption you have used, and it starts the statute of limitations on the IRS's ability to challenge the gift. If you do not file when required, the IRS can assess penalties and interest.

You do not owe federal gift tax unless you have already used up your entire $13.61 million lifetime exemption through prior gifts. For most people, that never happens. But the filing requirement exists regardless of whether tax is due, so do not skip it if you cross the threshold.

State gift taxes

A handful of states have their own gift tax in addition to federal tax. As of 2024, only Connecticut, Delaware, Illinois, Louisiana, Mississippi, New York, North Carolina, and Tennessee have gift taxes, though the rules and thresholds vary by state.

If you live in or give to someone in one of these states, check that state's tax agency website for the rules. Some state gift taxes have lower thresholds than the federal limit, so you could owe state tax even if you owe no federal tax. A tax professional in your state can advise you on state-specific rules.

Frequently Asked Questions

Can my spouse and I each give $18,000 to the same person?

Yes. Each spouse has their own $18,000 annual exclusion. If you are married, you and your spouse can each give $18,000 to your daughter in the same year for a combined $36,000 with no tax return required. This is called gift splitting. If you use gift splitting, you must both file Form 709 even though no tax is due.

Do I owe tax if I give someone a car or jewelry?

No, not when ready. A car, jewelry, or any other property counts as a gift at its fair market value. If the value exceeds $18,000 in one year, you file a return and the excess reduces your lifetime exemption, but you owe no tax unless you have exhausted your exemption. Most people never do.

What if I give someone money and they use it to pay my medical bill?

That counts as a gift to them, not a payment to the medical provider. It uses your $18,000 annual exclusion. To avoid using your exclusion, pay the provider directly yourself.

Does the annual limit reset if I give to different people?

Yes. The $18,000 limit applies per person per year. You can give $18,000 to your son, $18,000 to your daughter, and $18,000 to your grandchild in the same year with no return required. Each person has their own $18,000 bucket.

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

A genuine loan with a written agreement and a reasonable interest rate is not a gift and does not count toward the annual limit. If you lend money without charging interest or without a written agreement, the IRS may treat it as a gift. To be safe, document any loan in writing and charge at least the IRS minimum interest rate, which changes quarterly.