The federal gift tax applies when you transfer money or property to someone else without receiving equal value in return. Most people never pay gift tax because of two key protections: the annual exclusion and the lifetime exemption.
The 2026 annual exclusion: $19,000 per recipient
| 2024 | 2025 | 2026 | |
|---|---|---|---|
| Annual exclusion per recipient | $18,000 | $18,000 | $19,000 |
| Married couple (gift-splitting) | $36,000 | $36,000 | $38,000 |
| Lifetime exemption (individual) | $13.61M | $13.99M | $13.99M |
| Lifetime exemption (married couple) | $27.22M | $27.98M | $27.98M |
The annual gift tax exclusion for 2026 is $19,000 per recipient, up from $18,000 in 2025. This is the amount you can give to any single person in a calendar year without filing a gift tax return or affecting your lifetime exemption.
There is no limit on the number of recipients. You can give $19,000 to your child, $19,000 to each of your grandchildren, $19,000 to a friend, and so on. Each gift is evaluated separately per recipient.
Married couples can combine their exclusions through gift splitting. If your spouse consents (by signing Form 709), a married couple can give up to $38,000 per recipient from either spouse’s account without exceeding the exclusion. This requires filing Form 709 to document the split, even though no tax is owed.
What counts as a taxable gift
A taxable gift is any transfer of money or property where you receive less than fair market value in return:
- Cash
- Real estate
- Stocks, bonds, or other securities
- Forgiving a debt someone owes you
- Making an interest-free or below-market loan above $10,000
- Contributing to a 529 college savings plan (subject to special 5-year election rules)
Certain transfers are never subject to gift tax regardless of amount:
- Payments made directly to an educational institution for tuition (not room and board)
- Payments made directly to a medical provider for someone else’s medical care
- Gifts to your U.S. citizen spouse (marital deduction is unlimited)
- Contributions to political organizations
The key word for education and medical exclusions is “directly.” You must pay the school or hospital directly; writing a check to the person who then pays is a taxable gift above the $19,000 annual exclusion.
The lifetime exemption: $13.99 million
When gifts in a given year to a single recipient exceed $19,000, the excess reduces your lifetime gift and estate tax exemption. For 2026, that exemption is $13.99 million per person ($27.98 million for married couples).
This exemption is unified: it covers both lifetime taxable gifts and the value of your estate at death. If you give $119,000 to your child in 2026, $100,000 exceeds the annual exclusion, which reduces your remaining lifetime exemption from $13.99 million to $13.89 million. You pay no gift tax in the current year; the tax only potentially applies when your total taxable gifts and estate value exceed the lifetime exemption.
The OBBBA made the higher exemption permanent: The One Big Beautiful Bill Act locked in the elevated $13.99 million lifetime exemption. Without it, the exemption was scheduled to revert to approximately $7 million per person (inflation-adjusted) at the start of 2026. The permanent extension means high-net-worth families do not need to rush large gifts to beat a sunset deadline.
Filing Form 709
You must file IRS Form 709 (United States Gift and Generation-Skipping Transfer Tax Return) if:
- You gave more than $19,000 to any single person in 2026
- You made any gift of a future interest (such as placing money into a trust with restrictions)
- You and your spouse are splitting gifts
Form 709 is due April 15, 2027 (or October 15 with an extension). Filing it does not mean you owe gift tax; it just documents the reduction to your lifetime exemption. You owe actual gift tax only after your cumulative taxable gifts and estate exceed $13.99 million.
Practical planning considerations
Front-loading 529 contributions: You can contribute up to five years of annual exclusions ($95,000 per beneficiary, or $190,000 for married couples) to a 529 plan at once without exceeding the exclusion, by making a 5-year election on Form 709. No additional gifts to that beneficiary can be excluded for the next four years.
Gifts above the exclusion still make sense: Even if a gift exceeds $19,000, you may benefit from moving appreciating assets out of your estate now. Future appreciation on the gifted asset occurs outside your estate, reducing the potential estate tax exposure.
Annual exclusion resets each year: The $19,000 limit is per calendar year per recipient. It does not carry over. A gift made on December 31 uses up the exclusion for that year; a gift made on January 1 starts a fresh $19,000 for the new year.