The 2024 annual exclusion is $18,000 per person
You can give up to $18,000 to any one person in 2024 without filing a gift tax return or using any of your lifetime exemption. Your spouse can give the same amount to the same person in the same year, and neither of you reports it. This is the annual exclusion, and it resets on January 1 each year.
The 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 unrelated to you. You can give $18,000 to ten different people in one year and stay within the limit for each of them.
The exclusion amount changes most years. The IRS adjusts it for inflation in $1,000 increments. In 2023 it was $17,000; in 2024 it is $18,000. The IRS will announce the 2025 limit in late October 2024.
Key Takeaways
- You can give $18,000 per person per year in 2024 without filing a gift tax return or reducing your lifetime exemption.
- Your spouse can give another $18,000 to the same person, for a combined $36,000 per recipient per year.
- Gifts to spouses who are U.S. citizens and gifts that pay tuition or medical bills directly to the provider do not count against any limit.
- If you give more than $18,000 to one person in one year, you file Form 709 but usually owe no tax unless you have already used your lifetime exemption.
- The annual exclusion and lifetime exemption are separate — using one does not reduce the other.
Gifts that do not count against the limit
Certain gifts fall outside the annual exclusion entirely. Gifts to your spouse (if your spouse is a U.S. citizen) have no limit. You can give your spouse $100,000, $1 million, or any amount, and it does not count.
Gifts that pay someone's tuition or medical expenses directly to the school or provider also do not count. You must pay the institution itself, not reimburse the person or give them money to pay. If you write a check to the university for your grandchild's tuition, that gift is unlimited. If you give your grandchild $50,000 and they pay the tuition, the full $50,000 counts against the annual exclusion.
Gifts to political organizations and certain charitable donations have their own rules and are generally not subject to gift tax.
What happens if you give more than $18,000 in one year
If you give $25,000 to one person in 2024, the first $18,000 is covered by the annual exclusion. The remaining $7,000 is a taxable gift. You must file Form 709 (United States Gift Tax Return) with your tax return for that year.
Filing Form 709 does not mean you owe tax. Instead, the $7,000 counts against your lifetime exemption, which is $13.61 million in 2024. You only owe gift tax if you have already used up your entire lifetime exemption through prior gifts. Most people never reach that threshold.
If you are married and your spouse agrees, you can "split" the gift. You each report giving half, so $12,500 each. This keeps both of you under the annual exclusion and avoids using any lifetime exemption at all. Both spouses must file Form 709 to elect gift splitting.
The lifetime exemption and how it works with the annual exclusion
Your lifetime exemption is a separate pool of money you can give away (or leave at death) without owing federal gift or estate tax. In 2024 it is $13.61 million per person. This is not the same as the annual exclusion, and using one does not reduce the other.
Here is how they interact: you can give $18,000 per person per year without touching your lifetime exemption. If you give $25,000 to one person, the extra $7,000 uses $7,000 of your $13.61 million lifetime exemption. You still have $13.6 million left to give or leave at death.
The lifetime exemption is scheduled to drop to roughly $7 million per person on January 1, 2026, unless Congress changes the law. This is a major reason some people accelerate large gifts in 2024 and 2025 — they want to lock in the higher exemption while it lasts.
Timing gifts across years and spouses
If you want to give someone $36,000 without filing a return, you can do it in one year if you are married and your spouse joins you. You each give $18,000. Both of you must consent to gift splitting, and you both file Form 709 to report it.
You can also split a large gift across two calendar years. Give $18,000 on December 15, 2024, and $18,000 on January 5, 2025. Each year's gift is covered by that year's annual exclusion. This works for any amount, but it requires patience and planning.
If you give money to a trust or a custodial account for a minor, the rules are stricter. Gifts to trusts often do not may have access to for the annual exclusion unless the recipient has the right to withdraw the money when ready. Consult a tax professional before funding a trust with a large gift.
State gift taxes and other considerations
The federal government is the only entity that imposes a gift tax. No state has its own gift tax as of 2024. However, some states have estate taxes, and gifts you make during life can affect your estate tax liability in those states. If you live in or own property in Connecticut, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, or Washington, check your state's rules before making large gifts.
Loans to family members are not gifts if they are real loans — you must charge interest (at least the IRS minimum rate, called the applicable federal rate) and have a written promissory note. Without these, the IRS may treat the loan as a gift and count it against your exemptions.
When to file Form 709 and what to include
File Form 709 with your federal tax return if you gave more than $18,000 to any one person in 2024. You file it even if you owe no tax, because it documents the gift and starts the statute of limitations for the IRS to challenge it.
Form 709 asks for the recipient's name, address, and relationship to you; the date and description of the gift; and its value. If you are married and splitting gifts, both spouses sign the form. You can file electronically through your tax software or with a tax professional.
If you file late or not at all, the IRS may assess gift tax plus penalties and interest. The statute of limitations for gift tax is normally three years, but it can be longer if you do not file.
Frequently Asked Questions
Can I give my child $50,000 if I split it with my spouse?
No. The annual exclusion is $18,000 per person per year. With your spouse, you can give $36,000 combined ($18,000 each) without filing a return. Any amount above that requires Form 709 and uses your lifetime exemption, even with gift splitting.
Does paying my daughter's medical bills count as a gift?
Only if you pay the provider directly. If you pay the hospital or doctor for her surgery, it does not count against any limit. If you give her $10,000 and she pays the bill, the full $10,000 is a gift and counts toward the annual exclusion.
What if I give someone money and they give it back the next year?
A return gift does not erase the original gift. If you give your friend $25,000 in January and they give you $25,000 back in March, you have each made a taxable gift of $25,000. The IRS does not net them out.
Do I owe gift tax if I file Form 709?
Usually no. Filing Form 709 means you are reporting a gift over $18,000 and using your lifetime exemption. You only owe tax if you have already used up your entire $13.61 million lifetime exemption through prior gifts or bequests.
Will the annual exclusion change in 2025?
Probably yes. The IRS adjusts it for inflation each year in $1,000 increments. The 2025 amount will be announced in late October 2024. The lifetime exemption is scheduled to drop significantly on January 1, 2026, unless Congress acts.