The annual gift tax exclusion lets you give money or property to other people without filing a gift tax return
For 2024, you can give up to $18,000 per person per year without reporting the gift to the IRS. This is called the annual exclusion. If you give more than this amount to one person in a single year, you must file Form 709 (United States Gift Tax Return) with your tax return, even if you do not owe any tax.
The annual exclusion amount changes most years — it is adjusted for inflation. The IRS announces the new amount in October or November for the following year. If you gave gifts in 2023, that year's limit was $17,000 per person. The limit applies to each person you give to separately, so you can give $18,000 to your daughter and $18,000 to your son in the same year without filing.
Married couples can combine their exclusions. If you are married and file jointly, you and your spouse together can give $36,000 per person per year. This is called gift splitting, and it requires both spouses to consent — you do not need your spouse's signature on the gift itself, but you both must agree to treat it as a split gift when you file.
Key Takeaways
- You can give $18,000 per person per year (in 2024) without filing Form 709, and married couples can give $36,000 per person combined.
- The annual exclusion resets on January 1 each year, so a gift on December 31 and another on January 1 count toward two separate years.
- Gifts to spouses who are U.S. citizens and gifts to charities have no limit and never require a return.
- Filing Form 709 when you exceed the limit does not mean you owe tax — it just reports the gift and uses part of your lifetime exemption.
- The annual exclusion applies to gifts of cash, property, investments, or anything else of value, but not to gifts that are loans with no interest.
What counts as a gift for tax purposes
A gift is a transfer of money or property where you receive nothing of equal value in return. If you sell your car to your daughter for $5,000 and it is worth $20,000, the $15,000 difference is a gift. If you forgive a loan — meaning you tell someone they no longer have to repay you — that forgiveness is also a gift.
Tuition and medical expenses paid directly to the school or hospital do not count as gifts, even if you pay them for someone else. You can pay unlimited amounts to these providers without reporting anything. The key is that you pay the provider directly, not the person. If you give your grandchild $50,000 and they use it to pay tuition, that is a gift and counts toward your annual exclusion.
Gifts to your spouse (if they are a U.S. citizen) have no limit and never require a return. Gifts to registered charities also have no limit. These are called unlimited exclusions. Gifts to non-citizen spouses are limited to $18,000 per year (the same as any other person), though there are other rules that explore.
When you must file Form 709
You file Form 709 when you give more than the annual exclusion to one person in a single calendar year. You attach it to your federal income tax return (Form 1040) for that year. Filing the form does not mean you owe gift tax — it straightforward reports the gift and begins using your lifetime exemption.
The lifetime exemption is a separate pool of money ($13.61 million in 2024 for individuals, $27.22 million for married couples) that you can give away over your entire life without owing tax. When you file Form 709 for a gift over the annual exclusion, you are using part of this lifetime pool. Most people never owe gift tax because the lifetime exemption is so large, but you still must file the form to report the gift.
If you give $25,000 to one person in 2024, you file Form 709 to report the $7,000 that exceeds the $18,000 limit. That $7,000 reduces your lifetime exemption from $13.61 million to $13.603 million. You owe no tax at that time. Gift tax only becomes due if your total gifts over your lifetime exceed your lifetime exemption, which is rare.
Gifts that do not count against your limit
Certain gifts are excluded from the annual limit entirely. Gifts to your spouse (U.S. citizen) and gifts to registered charities never count. Payments made directly to a school for tuition or to a hospital or doctor for medical care do not count, regardless of the amount. These are called direct payments for education and medical care.
Gifts of future interests — such as the right to use property starting in five years — are treated differently than gifts of present interests and may not may have access to for the annual exclusion. Most everyday gifts (cash, a car, a house, investments) are gifts of present interests and do may have access to. If you are unsure whether a gift qualifies, a tax professional can review the specific situation.
How the annual exclusion works across years
The annual exclusion is tied to the calendar year, not to the date you give the gift. A gift on December 31 counts toward that year's limit. A gift on January 1 counts toward the next year's limit. If you give $18,000 on December 31, 2024, and another $18,000 on January 1, 2025, you have not exceeded either year's limit.
The exclusion does not carry over. If you give only $10,000 in 2024, you cannot give $26,000 in 2025 without filing a return. Each year starts fresh at $18,000 (or whatever the current year's limit is). The only pool that carries over is your lifetime exemption — unused lifetime exemption from 2024 is still available in 2025.
Gifts to minors and custodial accounts
You can give up to $18,000 per year to a minor without filing a return, just as you can with any other person. The annual exclusion applies regardless of the recipient's age. If you want to give more than the annual exclusion to a minor, you can set up a custodial account (also called an UGMA or UTMA account) or a 2503(c) trust, which may allow you to treat the gift as a present interest and may have access to for the annual exclusion even though the minor cannot access the money when ready.
These structures are complex and require professional help to set up correctly. A custodial account is simpler — you name a custodian (often yourself or another adult) to manage the money until the minor reaches age 18 or 21 (depending on state law). A 2503(c) trust is more formal but gives you more control over when the minor receives the money. Both allow you to give more than the annual exclusion while still using the exclusion, rather than dipping into your lifetime exemption.
Frequently Asked Questions
Do I owe gift tax if I give more than $18,000 to one person?
Not when ready. You file Form 709 to report the excess, which uses part of your lifetime exemption ($13.61 million in 2024). You owe tax only if your total gifts over your entire life exceed your lifetime exemption, which is rare. Most people never owe gift tax.
Can my spouse and I each give $18,000 to the same person without filing?
Yes. If you are married, you can each give $18,000 to the same person in the same year for a total of $36,000, and neither of you needs to file Form 709. This is called gift splitting. Both spouses must agree to split the gift, but you do not need written consent.
Does paying someone's medical bill count as a gift?
No, if you pay the provider directly. If you pay the hospital or doctor for someone else's care, that payment does not count as a gift and has no limit. If you give the person cash and they pay the bill, that is a gift and counts toward your annual exclusion.
What if I give someone a loan instead of a gift?
A loan is not a gift if there is a real expectation of repayment. To be safe, put the loan in writing and charge at least the IRS minimum interest rate (which changes monthly). If you forgive the loan later, that forgiveness is a gift and counts toward your annual exclusion at that time.
Does the $18,000 limit explore to gifts of property or only cash?
The limit applies to any gift of value — cash, stocks, real estate, a car, jewelry, or anything else. You report the fair market value of the property on Form 709. If you give someone a painting worth $25,000, that is a $25,000 gift and exceeds the annual exclusion.