Gift Tax: 2024-2025 Annual Limits and Exclusions

Gift tax is a federal tax on the transfer of money or property to another person. Thankfully, because of annual and lifetime limits, few people end up owing it.

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What is the gift tax limit?

The gift tax is a federal tax on transfers of money or property to other people who are getting nothing or less than full value in return. Two factors determine how much you can give away before owing taxes on the gifted amount: the annual gift tax limit and the lifetime gift tax limit.

Annual gift tax limit 2024

The gift tax limit (also known as the gift tax exclusion) is $18,000 for 2024. For married couples, the limit is $18,000 each, for a total of $36,000. This amount is the maximum you can give a single person without having to report it to the IRS.

To be clear, exceeding the annual gift tax limit doesn't mean you have to pay a gift tax — it just means you need to submit IRS Form 709 to disclose the gift. The amount of your contribution that exceeds the annual limit will then be subtracted from your larger lifetime gift tax exclusion (more on this below).

Annual gift tax limit 2025

For 2025, the annual gift tax exclusion rises to $19,000. Since this amount is per person, married couples have a total gift tax limit of $38,000.

How the annual gift tax exclusion works

The annual gift tax exclusion is a set dollar amount that you may give to someone without reporting it to the IRS. If you give away more than the annual exclusion amount in cash or assets (for example, stocks, land, a new car) to any one person during the tax year, you will need to file a gift tax return in addition to your federal tax return the following year.

  • The annual exclusion is per recipient, not the sum total of all your gifts. That means, for example, that you can gift $18,000 to your cousin, another $18,000 to a friend, another $18,000 to a neighbor, and so on in 2024 without having to file a gift tax return in 2025.

  • If you’re married, you and your spouse could each give away $18,000 in 2024 without needing to file a gift tax return in 2025. If you want to combine your annual exclusions to give someone $36,000, you can choose to take advantage of "gift splitting"

    Internal Revenue Service. Instructions for Form 709 (2023). Accessed Sep 24, 2024.
    .

What is the lifetime gift tax exclusion?

In addition to the annual gift tax exclusion, you get a lifetime gift tax exclusion. Any amount you give over the annual limit is subtracted from your larger lifetime limit. Once you've gifted over your lifetime amount, you may begin to owe taxes.

The 2024 lifetime gift limit is $13.61 million. Because the exemption is per person, married couples can exclude double that — $27.22 million — in lifetime gifts.

In 2025, the lifetime gift tax exclusion rises to $13.99 million, or $27.98 million for married couples. However, in 2026, the exclusion amount will revert back to its pre-2018 level of about $5 million (as adjusted for inflation) per individual

Internal Revenue Service. Estate and Gift Tax FAQs. Accessed Sep 24, 2024.
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The gift tax return that you need to file if you exceed the annual limit simply keeps track of that lifetime exclusion. So if you don't gift anything during your life, then you have your whole lifetime exclusion to use against your estate when you die.

“Think about buckets or cups,” says Christopher Picciurro, a certified public accountant and co-founder of accounting and advisory firm Integrated Financial Group in Michigan. Any excess over the annual limit “spills over” into the lifetime exclusion bucket.

» MORE: Learn how estate tax works

Lifetime gift tax exemption example

If you give your brother $50,000 in 2024, you’ll use up your $18,000 annual exclusion. The bad news is that you’ll need to file a gift tax return in 2025, but the good news is that you probably won’t pay a gift tax. Why? Because the extra $32,000 ($50,000 - $18,000) simply counts against your lifetime exclusion. Next year, if you give your brother another $50,000, the same thing happens: you use up your annual exclusion and whittle away another portion of your lifetime exclusion.

Who pays the gift tax?

The donor, not the recipient, typically pays the gift tax. According to the IRS, money or property that is transferred to another person without receiving anything in exchange is a gift. Gifts that exceed a certain value may be subject to a tax.

Do you pay taxes when you receive a gift?

In most cases, no. Assets you receive as a gift or inheritance typically aren’t taxable income at the federal level. However, if the assets later produce income (perhaps they earn interest or dividends, or you collect rent), that income is probably taxable

Internal Revenue Service. Publication 525: Taxable and Nontaxable Income. Accessed Sep 24, 2024.
. Also, keep in mind that while there is no federal inheritance tax, some states may impose their own.

Is the gift tax deductible?

Gifts of cash or property to family or friends are not tax-deductible. Only charitable donations to qualified nonprofits may be tax-deductible

Internal Revenue Service. Frequently Asked Questions on Gift Taxes. Accessed Sep 24, 2024.
.

How much is the gift tax rate?

Taxpayers typically only pay gift tax on the amounts that exceed the allotted lifetime exclusion, which is $13.61 million in 2024 and $13.99 million in 2025. Gift tax rates range from 18% to 40%. Of course, there are exceptions and special rules for calculating the tax, so check the instructions for IRS Form 709 for all the details

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Gift tax rates

Taxable amount

Rate of tax

up to $10,000

18%

$10,001 to $20,000

20%

$20,001 to $40,000

22%

$40,001 to $60,000

24%

$60,001 to $80,000

26%

$80,001 to $100,000

28%

$100,001 to $150,000

30%

$150,001 to $250,000

32%

$250,001 to $500,000

34%

$500,001 to $750,000

37%

$750,001 to $1,000,000

39%

$1,000,000 and over

40%

Common gift tax return triggers

Sharing is caring, but some situations inadvertently lead to a gift tax return, pros say.

Gifting large sums of money to family

Paying for vacations, cars or other stuff

Giving a laid-back loan

Lending money to friends and family can be tricky, and the IRS can make it even worse. It considers interest-free loans as gifts. Or, if you lend them money and later decide they don't need to repay you, that's also a gift.

Setting up joint bank accounts

“Let’s say you live by Grandma, so for convenience, we're going to put you on Grandma's bank account. Guess what just happened?” Picciurro says. “If you're put as a joint [owner] on a bank account with somebody and you have the right to take the money out at any time, essentially Grandma is giving you a gift.” This applies to joint accounts when the other owner is not your spouse.

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