The federal gift tax exemption for 2024 is $18,000 per person per year

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

The $18,000 limit applies to each recipient separately. You can give $18,000 to your daughter, $18,000 to your son, $18,000 to your spouse, and $18,000 to a friend all in the same year without triggering any tax. What matters is how much you give to each individual person, not how much you give in total.

If you are married and your spouse agrees, you can treat gifts as if you both gave them. This is called gift splitting. It lets you give up to $36,000 per person per year ($18,000 from each of you) without filing a return. Both spouses must consent to split gifts, and you report this on Form 709.

Key Takeaways

  • You can give $18,000 per person per year (in 2024) without filing a gift tax return or owing federal tax.
  • The limit resets on January 1 each year, so a gift on December 31 and another on January 1 are counted in different years.
  • Married couples can give $36,000 per person per year if they both agree to split the gifts.
  • Gifts to your spouse have no limit if your spouse is a U.S. citizen, and gifts to charity have no limit at all.
  • If you give more than the annual limit to one person, you must file Form 709, but you likely will not owe tax unless you have used up your lifetime exemption.

What counts as a gift for tax purposes

The IRS defines a gift as a transfer of money or property where you receive nothing of value in return. If you give your adult child $25,000 with no expectation of repayment, that is a gift. If you lend your adult child $25,000 and they sign a promissory note agreeing to repay you with interest, that is a loan, not a gift.

Gifts include cash, real estate, vehicles, investments, and personal property. They also include forgiving a debt — if you lend someone money and then cancel the debt, the cancelled amount is treated as a gift. Paying someone's tuition or medical bills directly to the school or hospital does not count as a gift to that person, so these payments do not use up your annual exclusion.

Gifts to your spouse who is a U.S. citizen have no limit. You can give your spouse any amount without filing a return or owing tax. Gifts to charity also have no limit — charitable donations are not subject to gift tax at all.

When the annual exclusion amount changes

The IRS adjusts the annual exclusion amount every year based on inflation. In 2023, the limit was $17,000 per person. In 2024, it increased to $18,000. The amount usually goes up by $1,000 increments, though some years it stays the same if inflation is low.

The exclusion amount that applies is the one in effect during the calendar year you make the gift. A gift made on December 15, 2024, uses the 2024 limit of $18,000. A gift made on January 5, 2025, uses the 2025 limit, which the IRS will announce in late 2024. You should check the IRS website or a tax professional each year if you plan to give large amounts.

What happens if you give more than $18,000 to one person

If you give $25,000 to your daughter in one year, you have exceeded the annual exclusion by $7,000. You must file Form 709 with your tax return to report this excess gift. However, filing the form does not mean you owe tax.

The excess amount counts against your lifetime exemption, which is separate from the annual exclusion. For 2024, your lifetime exemption is $13.61 million. This means you can give away up to $13.61 million total over your lifetime (or at death) before owing any federal gift or estate tax. Most people never reach this limit.

If you give $25,000 to your daughter, you file Form 709, and $7,000 of your lifetime exemption is used. You still owe no tax. You can continue giving to others up to $18,000 per person per year without filing. Only if your total lifetime gifts exceed $13.61 million would you owe federal gift tax.

State gift tax rules vary widely

Federal gift tax is what most people hear about, but a few states also impose their own gift tax. Connecticut, Delaware, Louisiana, Mississippi, North Carolina, and Tennessee have gift taxes, though the rules and limits differ from federal law. Some states tax gifts above a certain amount; others tax all gifts above a threshold.

If you live in or give to someone in one of these states, you should research that state's rules separately. A gift that is tax-free under federal law may still be taxable under state law. Your state tax department website or a tax professional in your state can tell you what applies to your situation.

Gifts from parents to minor children

The $18,000 annual exclusion applies to gifts to minor children the same way it applies to adults. You can give $18,000 to your 10-year-old child without filing a return. However, money given to a minor must be handled carefully for tax purposes if it earns income.

If you give your child $18,000 in cash and they deposit it in a savings account, the interest the account earns is taxable income to the child. The child must report this on their own tax return (or you may report it on yours, depending on the amount). The gift itself is not taxable, but the income it generates is.

If you want to give money to a minor to use for their education or support, consider using a 529 plan or a Coverdell Education Savings Account. These are tax-advantaged accounts designed for education expenses. You can contribute $18,000 per child per year to a 529 plan without gift tax, and the money grows tax-free if used for may have access to education costs.

Frequently Asked Questions

Can I give someone $18,000 in December and another $18,000 in January without owing tax?

Yes. The annual exclusion resets on January 1 each year. A gift on December 31 counts toward that year's limit, and a gift on January 1 counts toward the next year's limit. You can give $18,000 in December and $18,000 in January to the same person without filing a return, as long as you do not exceed $18,000 in either calendar year.

Do I have to report gifts to the IRS even if I do not owe tax?

You must file Form 709 if you give more than $18,000 to one person in a year, even if you do not owe tax. You do not file if you stay within the $18,000 limit per person. If you are married and split gifts with your spouse, you must file Form 709 to report the split, even if the total is within the limit.

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

Paying someone's rent or mortgage directly to the landlord or lender does not count as a gift to that person for tax purposes. These payments do not use up your annual exclusion. However, giving the person cash to pay their own rent does count as a gift.

What if I give a gift and the person gives me money back later?

If you give someone money as a gift and they later repay you, the repayment does not make it a loan retroactively. The original transfer was a gift and counts toward your annual exclusion. If you intended it as a loan from the start, you should have a written promissory note with a stated interest rate to document that.

Can I give my spouse more than $18,000 without owing tax?

Yes. Gifts to a spouse who is a U.S. citizen are unlimited. You can give your spouse any amount without filing a return or owing federal gift tax. This rule does not explore if your spouse is not a U.S. citizen; in that case, the annual exclusion is $18,000 (adjusted for inflation each year).