The federal gift tax annual exclusion lets you give money to as many people as you want without filing a gift tax return, as long as each gift stays under a set dollar amount per year

For 2024, you can give up to $18,000 per person per year without triggering a gift tax return requirement. This amount is called the annual exclusion. If you give more than $18,000 to one person in a single year, you must file Form 709 (United States Gift Tax Return) with the IRS, even if you owe no tax.

The annual exclusion amount changes most years. The IRS adjusts it for inflation in $1,000 increments, so it may be different in 2025 and beyond. You can find the current year's amount on the IRS website or by checking the instructions for Form 709.

The annual exclusion applies to gifts of money, property, investments, or anything else of value. It does not matter whether the recipient is a family member, a friend, or someone else. Each person you give to has their own separate $18,000 limit.

Key Takeaways

  • You can give up to $18,000 per person per year in 2024 without filing a gift tax return, and this amount increases with inflation most years.
  • If you give more than the annual exclusion to one person in a single year, you must file Form 709 even if you owe no tax.
  • Married couples can combine their exclusions, allowing each spouse to give $18,000 to the same person in the same year for a total of $36,000.
  • Gifts to spouses who are U.S. citizens and gifts that pay someone's medical bills or tuition directly to the provider do not count toward the annual exclusion.

How the annual exclusion works when you give to multiple people

The annual exclusion is per person, per year. This means you can give $18,000 to your child, $18,000 to your grandchild, $18,000 to your friend, and $18,000 to your sibling all in the same year without filing a return. Each person receives their own separate $18,000 allowance.

If you give $20,000 to one person in a single year, you must file Form 709. You will not owe tax on the extra $2,000, but the IRS requires you to report it. That $2,000 counts against your lifetime gift and estate tax exemption, which is a much larger limit ($13.61 million in 2024) that applies to your total gifts and estate over your entire life.

Married couples have more flexibility. Each spouse has their own annual exclusion. If you are married, you and your spouse can each give $18,000 to the same person in the same year, totaling $36,000, without either of you filing a return.

Gifts that do not count toward the annual exclusion

Certain gifts are completely exempt from gift tax and do not use up any of your annual exclusion. Gifts to a spouse who is a U.S. citizen have no limit. You can give your spouse any amount of money or property without filing a return or using any of your lifetime exemption.

Gifts that pay someone's medical expenses or tuition are also exempt, but only if you pay the provider directly. For example, if you pay your grandchild's university tuition directly to the school, that payment does not count as a gift and does not use your annual exclusion. The same applies if you pay a hospital bill directly to the hospital. If you give your grandchild money and they pay the tuition themselves, that counts as a regular gift and uses your exclusion.

Gifts to political organizations and certain charities do not count toward the annual exclusion. Charitable donations to may have access to organizations may also reduce your taxable income if you itemize deductions on your tax return, though that is a separate tax benefit.

What happens if you exceed the annual exclusion

Exceeding the annual exclusion does not automatically mean you owe gift tax. It means you must file Form 709 to report the excess gift to the IRS. The excess amount is subtracted from your lifetime gift and estate tax exemption.

Your lifetime exemption is the total amount you can give away (during life or through your estate after death) before owing federal gift or estate tax. In 2024, this exemption is $13.61 million per person. Most people never reach this limit, so they never owe gift tax even if they file Form 709 in years when they give more than the annual exclusion.

The lifetime exemption amount changes with inflation and also changes based on federal law. It is scheduled to drop to roughly $7 million per person in 2026 unless Congress extends the current law. You can find the current year's exemption on the IRS website.

State gift taxes and other considerations

Federal gift tax is separate from state gift tax. A small number of states have their own gift tax with different rules and limits. Connecticut, Delaware, Louisiana, North Carolina, and Tennessee have estate taxes that may affect large gifts, though they do not have a separate gift tax. If you live in or give property located in one of these states, you may want to research that state's rules.

Gift tax also does not explore to gifts that are incomplete for tax purposes. For example, if you put money in a joint bank account with someone but retain control over the account, the IRS may not treat it as a completed gift. The rules around incomplete gifts are complex and depend on the specific situation.

Loans are not gifts, even if you never ask for repayment. However, if you forgive a loan later, the forgiveness may be treated as a gift. If you lend money to someone, it is wise to document the loan in writing, even if it is to a family member.

How to report gifts over the annual exclusion

If you give more than $18,000 to one person in 2024, you file Form 709 with your federal tax return (Form 1040) by April 15 of the following year. Form 709 asks for details about each gift: who received it, the date, the value, and your relationship to the recipient.

Filing Form 709 does not mean you owe tax. It straightforward reports the excess gift to the IRS and reduces your lifetime exemption by that amount. You only owe tax if your total lifetime gifts exceed your lifetime exemption, which is rare.

If you are married and you and your spouse give a joint gift, you can file Form 709 together or separately, depending on your situation. The instructions for Form 709 explain when joint filing applies.

Frequently Asked Questions

Do I have to report gifts under $18,000?

No. Gifts under the annual exclusion do not require a Form 709 filing. You can give $18,000 or less to as many people as you want without reporting anything to the IRS.

Can I give someone $36,000 one year and nothing the next year?

Yes. The annual exclusion resets every January 1. If you give someone $36,000 in one year, you have used your exclusion for that year, but you start fresh on January 1 with another $18,000 to give that person. The exclusion does not roll over or average across years.

What if I give a gift and do not know its exact value?

You must estimate the fair market value of any gift. For cash, this is straightforward. For property, investments, or items like jewelry or art, you may need a professional appraisal. If you file Form 709, you report the value you used at the time of the gift.

Does a gift of stock or cryptocurrency count differently?

No. Gifts of stock, cryptocurrency, real estate, or any other property are valued at fair market value on the date of the gift. A $18,000 gift of Bitcoin counts the same as an $18,000 cash gift for annual exclusion purposes.

If my spouse and I file taxes jointly, do we share one annual exclusion?

No. Each spouse has their own $18,000 annual exclusion per person per year. You can combine your exclusions only when giving to the same recipient in the same year. For example, you and your spouse can each give $18,000 to your child for a total of $36,000.