The rules surrounding taxes on gifts often create confusion. With the 2025 tax season kicking off, be sure you understand the nuts and bolts of the gift tax, including when a gift tax form needs to be filed.
What Is the 2024 Gift Tax Exclusion?
The annual gift tax exclusion is $18,000 for 2024. This means that any person who gave away $18,000 or less to any one individual (anyone other than their spouse) in 2024 does not have to report the gift or gifts to the Internal Revenue Services (IRS). (Note that the annual gift tax exclusion is $19,000 as of 2025.)
Any person who gave away more than $18,000 to any one person in 2024, however, is technically required to file an IRS Form 709, the gift tax return. But just because you are required to file a Form 709 doesn't mean you necessarily have to; this depends on your past gift-giving history.
Lifetime Gift Tax Exemption
The IRS allows you to give away a total of $13.61 million in 2024 ($13.99 million as of 2025) during your lifetime before a gift tax is owed. This $13.61 million exclusion means that even if you are technically required to file a Form 709 because you gave away more than $18,000 to any one person last year, you will owe taxes only if you have given away more than a total of $13.61 million in the past.
As a result, the filing of a Form 709 is irrelevant for most people because most people don't have $13.61 million to give away. Note that the gift tax exclusion is set to be cut in half in 2026.
How to Avoid Gift Taxes
For those who have the means, there are several ways to give away more than $13.61 million over a lifetime without owing taxes. Keep in mind that Form 709 is only required when you give away more than the annual exclusion amount.
For example, a married couple with a married child can give away $72,000 in one year without having to report the gift:
Each parent gives the child and the child's spouse $18,000 each. If a couple did this for 25 years, they would have given away $1.8 million without even having to report the gifts, much less having them count against their lifetime $13.61 million exclusion. It would also be possible for the couple to give away $144,000 within a short span of time — $72,000 in December and $72,000 in January of the next calendar year.
(Note that if both spouses have made gifts, each must file a separate Form 709.)
The Type of Gift Matters
Another way for a gift to be exempted from reporting requirements, no matter the gift's size, is to pay for someone else's medical care or school tuition. The money must be paid directly to the school, university, or health care provider to be exempt. Pre-payments can often be made as soon as the person is admitted to the school (educational institutions include not just colleges but also nursery schools, private grade schools, or private high schools).
However, if you contribute to someone else's 529 college savings plan, you are subject to the $18,000 gift exclusion rule. A special regulation in the tax code enables a donor to use up five years' worth of their exclusions and gift $90,000 (in 2024) to a 529 at one time.
Gifts to a Spouse or Charity
Gifts to a spouse are usually not subject to any federal gift taxes as long as your spouse is a citizen of the United States. If your spouse is not a U.S. citizen, you can give only $185,000 without reporting the gift (in 2024). Anything over that amount is a taxable gift and should be reported on Form 709.
If you have given away property other than money, like stock, you have to report that on your gift return, too, if the value is more than $18,000. If the stock has gone up in value since you bought it, you report the value as of the date that you gave it away.
You may want to inform the recipient that the basis, or the amount that you bought the stock for, becomes their basis, as it is used to determine the profit or loss when the property is sold.
Finally, tax-deductible gifts made to charities need not be reported on a gift tax return unless the donor retains some interest in the gifted property.
Work With an Estate Planning Attorney
For more information on gift taxes, speak with your estate planning attorney.
Estate planning attorneys can provide valuable guidance on navigating gift taxes by helping you understand the rules and regulations that apply to your specific situation. They can assist in determining the fair market value of your gifts, ensuring compliance with tax laws, and advising on strategies to minimize your tax liabilities. In addition, they can help you structure your gifts in a way that maximizes benefits for both you and the recipient, while also addressing any potential future tax implications.
