The federal gift tax annual exclusion lets you give money or property to other people without filing a gift tax return

In 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 this to any one person in a single year, you must file Form 709 (United States Gift Tax Return) with the IRS, even if you do not owe tax.

The annual exclusion amount changes most years because it is tied to inflation and rounded to the nearest $1,000. In 2023 it was $17,000. In 2025 it will be $18,000 again (the IRS announced this in October 2024). The exclusion applies to each person you give to separately — 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 without filing a return. This is called gift splitting, and both spouses must agree to it on the return if you exceed the limit.

Key Takeaways

  • You can give $18,000 per person per year in 2024 without filing a gift tax return, and this amount changes annually based on inflation.
  • Gifts above the annual exclusion require you to file Form 709, but filing does not automatically mean you owe tax.
  • Married couples can combine their exclusions to give $36,000 per person per year if both spouses agree to gift splitting.
  • Certain gifts are never taxable: tuition paid directly to a school, medical expenses paid directly to a provider, gifts to spouses, and gifts to charities.
  • Gifts above the annual exclusion count against your lifetime gift and estate tax exemption, which is $13.61 million per person in 2024.

What counts as a gift for tax purposes

A gift is a transfer of money or property where you receive nothing of value in return. The IRS looks at whether you intended to make a gift, not whether the recipient calls it one. If you lend money to a family member with a written agreement and a real expectation of repayment, that is a loan, not a gift — even if you forgive it later. If you forgive a loan, the forgiven amount becomes a gift at that point.

Gifts include cash, real estate, stocks, artwork, vehicles, and jewelry. They also include forgiving a debt. Gifts do not include payments you make for someone else's tuition (if paid directly to the school), medical bills (if paid directly to the provider), or support you provide to a dependent spouse. These are outside the gift tax system entirely.

The value of a gift is what it was worth on the date you gave it, not what you paid for it. If you give stock worth $25,000 on the day of the gift, that is a $25,000 gift, regardless of whether you bought it for $5,000 or $50,000.

When you must file Form 709 even if you do not owe tax

You file Form 709 whenever you give more than the annual exclusion to any single person in a year. You file it with your federal income tax return (Form 1040) by April 15 of the following year. Filing does not mean you owe gift tax — it means you are reporting the gift to the IRS.

When you file Form 709, the excess amount (anything over $18,000 per person) counts against your lifetime exemption. This is a separate pool of money you can give away or leave in your estate without owing federal tax. In 2024, your lifetime exemption is $13.61 million. Most people never reach this limit in their lifetime, so filing Form 709 does not result in a tax bill.

However, if you do not file Form 709 when required, the IRS can assess penalties and interest. The filing requirement exists so the IRS can track your lifetime gifts against your exemption. If you give $25,000 to your daughter in 2024, you file Form 709 reporting the $7,000 excess, and that $7,000 reduces your $13.61 million lifetime exemption to $13.603 million.

Gifts that are never taxable

Some gifts fall outside the gift tax system entirely and do not count toward your annual exclusion or lifetime exemption. These are called excluded gifts.

Tuition and medical expenses: If you pay someone's tuition directly to the school or their medical bills directly to the provider, those payments are not gifts for tax purposes. You can pay any amount this way without filing a return or using your exemption. The payment must go directly to the institution — if you give the money to the person and they pay the school, it is a gift.

Gifts to spouses: If your spouse is a U.S. citizen, you can give them any amount without limit or filing. This is called the unlimited marital deduction. If your spouse is not a U.S. citizen, the annual exclusion is higher ($185,000 in 2024) but still limited.

Gifts to charities: Donations to may have access to charities are not subject to gift tax. You may be able to deduct them on your income tax return, but that is a separate benefit.

Gifts to political organizations: Contributions to political candidates, parties, and committees are not subject to gift tax, though they may be subject to campaign finance limits.

How the lifetime exemption works with annual gifts

The annual exclusion and the lifetime exemption are two separate things. The annual exclusion ($18,000 per person in 2024) is what you can give each year without filing. The lifetime exemption ($13.61 million in 2024) is the total amount you can give away during your life and at death without owing federal tax.

Every time you give more than the annual exclusion to someone, the excess counts against your lifetime exemption. If you give $25,000 to your son, the $7,000 over the limit uses up $7,000 of your $13.61 million lifetime exemption. You still do not owe tax — you are just reducing the amount you can give away tax-free in the future or leave in your estate.

The lifetime exemption is scheduled to drop significantly after 2025. Unless Congress changes the law, it will fall to roughly $7 million per person on January 1, 2026. This means gifts you make now that exceed the annual exclusion will use up exemption at the current higher level. This is why some people make large gifts in 2024 and 2025 — to lock in the higher exemption before it drops.

State gift taxes and how they differ from federal tax

A few states have their own gift tax in addition to the federal gift tax. As of 2024, only Connecticut, Delaware, Illinois, Louisiana, Mississippi, New York, North Carolina, and Tennessee have state gift taxes, and most of these are being phased out or have very high exemptions.

State gift tax rules vary widely. Some states use the same annual exclusion as the federal government ($18,000 in 2024). Others have lower exclusions or higher lifetime exemptions. If you live in or give property to someone in a state with a gift tax, you may need to file a state return even if you do not file federally, or vice versa.

The best way to know whether state gift tax applies to you is to check your state's tax authority website or speak with a tax professional in your state. Federal gift tax rules do not automatically explore to state tax.

Frequently Asked Questions

Can I give more than $18,000 if I file Form 709?

Yes. Form 709 is the form you use to report gifts over the annual exclusion. Filing the form does not limit how much you can give — it just reports the excess to the IRS and counts it against your lifetime exemption. You can give $100,000 to someone in one year; you would file Form 709 reporting the $82,000 excess, and that amount would reduce your lifetime exemption.

Does my spouse have to agree to gift splitting?

Yes. If you are married and want to combine your annual exclusions to give $36,000 per person instead of $18,000, both spouses must agree. You indicate this on Form 709 by checking the gift-splitting box. If only one spouse wants to split gifts, you cannot do it.

What if I give someone money and they give me something back — is that still a gift?

If the values are roughly equal and both of you intended an exchange, it is not a gift — it is a trade. If you give $10,000 and receive $9,500 in return, the $500 difference may be a gift. The IRS looks at intent and whether the exchange was at fair market value. If you are unsure, document what was exchanged and when.

Do I have to report gifts I receive?

No. The gift tax is paid by the person who gives, not the person who receives. You do not file any form or report gifts you receive on your personal income tax return. The giver is responsible for filing Form 709 if the gift exceeds the annual exclusion.

Can I give $18,000 to multiple people without filing?

Yes. The $18,000 annual exclusion applies to each person separately. You can give $18,000 to your daughter, $18,000 to your son, $18,000 to your grandchild, and $18,000 to a friend in the same year without filing any return. You only file Form 709 if you give more than $18,000 to any single person in that year.