What is the Gift Tax Exclusion for 2024?
Complying with the annual gift tax limit can save you time and money when you are giving to family, friends and others.
![U.S. money in a gift bag](https://cdn.mos.cms.futurecdn.net/w87gkTFsmDzQYnmvnDJCRh-415-80.jpg)
Are you considering giving cash or property to loved ones or others in 2024? Knowing the annual gift tax exclusion can save you money and spare you from filing gift tax returns.
Here’s what you need to know about the federal gift tax and how much you can offer as a one-time gift this year without worrying about tax reporting.
What is the gift tax?
The gift tax, a federal tax ranging from 18% to 40%, applies to gifts individuals make throughout the year. While the giver typically pays the tax (if any), there are some circumstances where the recipient could be responsible. Additionally, the estate bears the federal gift tax responsibility if the giver dies before the tax is settled.
![https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png](https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-320-80.png)
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
- The gift tax extends beyond cash transactions, encompassing real estate, vehicles, forgiven debts, insurance policy benefits, stock transfers, etc.
- For tax purposes, the gift amount is the item's "fair market value" at the time of the gift.
Gift tax limits: How much gift money is tax-free?
To navigate federal gift tax, most people leverage exemptions. One is the annual gift tax exclusion, also known as the gift tax limit, a set dollar amount adjusted yearly for inflation. You can gift this amount annually to as many recipients as you desire, and if you're married, your spouse can also.
Note: Certain gifts, such as those to spouses, charitable organizations, political entities, educational institutions (for tuition), and healthcare providers (for medical care), may also be exempt.
It’s a good idea to consult with a tax professional for sizable gifts to ensure compliance with tax rules and regulations.
Federal gift tax exemption 2024
For 2024, the annual gift tax limit is $18,000. (That’s up $1,000 from last year’s limit since the gift tax is one of many tax amounts adjusted annually for inflation.) For married couples, the combined 2024 limit is $36,000.
For example: If you are married and have two married children and two grandchildren, you and your spouse can give up to $36,000 to each of your kids, their spouses, and the grandchildren in 2024 without having to file a gift tax return or pay any tax. This means you can give a total of $216,000 in tax-free gifts.
Remember: staying under these limits per recipient exempts you from filing a gift tax return for the year. However, the annual limit is time-sensitive, meaning you need to make 2024 gifts before Dec. 31, 2024.
Gift tax limit 2023
In 2023, the annual gift tax limit was $17,000. For married couples, the combined 2023 limit was $34,000. (These are the numbers you’ll refer to for federal income tax purposes in this 2024 tax filing season.)
What if you exceed the gift tax limit?
If you exceed the annual gift tax limit, you may have to file a federal gift tax return (IRS Form 709). But exceeding the limit doesn't necessarily result in owing tax, thanks to a high lifetime estate and gift tax exemption.
The 2024 lifetime estate tax exemption is $13.61 million (double for married couples). (In 2023, it was $12.92 million.) This shields most people from having to pay federal gift tax. You report excess amounts beyond the annual exclusion on Form 709, but actual gift tax payment only occurs if the total surpasses the lifetime limit.
Lifetime gift tax exemption changes in 2026
Looking ahead, the lifetime estate and gift tax exemption is scheduled to be reduced by half in 2026 and adjusted for inflation. (Estimates suggest a reduction close to $7 million or less).
- If you are wealthy and have a large estate, gifts given in 2026 or beyond (if the limit sunsets as scheduled) could be subject to up to 40% gift tax.
- Meanwhile, gifts given before 2026 benefit from the high lifetime tax exemption.
Gift tax: Bottom line
Understanding the nuances of the gift tax exclusion can help you navigate the gift-giving landscape in a way that saves you time. But giving and estate planning can be complex, so consult a tax professional for personalized advice tailored to your unique circumstances.
Related
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
As the senior tax editor at Kiplinger.com, Kelley R. Taylor simplifies federal and state tax information, news, and developments to help empower readers. Kelley has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist.
-
Confused by Annuities? Making Sense of the Different Types
Many investors aren't sure if annuities are a good option for meeting financial goals. Let's look at the different categories, along with their pros and cons.
By Kris Maksimovich, AIF®, CRPC®, CPFA®, CRC® Published
-
Talkin' 'Bout My Generational Wealth: Baby Boomers
With retirement, each generation has different priorities and challenges. For Baby Boomers, it's a matter of ready or not, here it comes.
By Alvina Lo Published
-
IRS Ends Inherited IRA Confusion: Annual RMDs Required for Many
IRAs The agency has resolved a major point of uncertainty for inherited IRA beneficiaries.
By Kelley R. Taylor Last updated
-
$145 Million in ‘Senior Freeze’ Checks Mailed
Property Tax What you need to know about New Jersey's property tax relief program for older adults.
By Kate Schubel Published
-
TaxAct Class Action Settlement: Details to Know
Tax Filing A multimillion-dollar settlement over alleged data privacy violations affects some TaxAct users.
By Kelley R. Taylor Last updated
-
An IRA Contribution Option You Might Not Know
IRAs Retirement savings might not have to take a back seat just because your partner doesn't earn income.
By Kelley R. Taylor Last updated
-
Project 2025 Tax Overhaul Blueprint: What You Need to Know
Tax Proposals Some people wonder what Project 2025 is and what it suggests for taxes.
By Kelley R. Taylor Last updated
-
The Taxes That Come out of Your Paycheck
Payroll Tax Your take-home pay is often less than expected due to several payroll tax withholdings you need to know.
By Kelley R. Taylor Last updated
-
Seven States Where Gas Tax Increased July 1
Gas Taxes Since July has arrived, drivers in several states are facing a gas tax hike.
By Kelley R. Taylor Last updated
-
401(k) Withdrawal Penalty Rule Changes for 2024
Tax Rules More people are taking early emergency withdrawals from retirement savings accounts. New rules might offer some relief.
By Kelley R. Taylor Last updated