How the Annual Gift Tax Exclusion Works
The IRS allows you to give up to $18,000 per recipient per year (2024) completely free of gift tax and without filing a gift tax return. There is no limit on the number of recipients, so a married couple with 5 children can give $36,000 per child ($180,000 total) each year through gift-splitting.
Gifts above the annual exclusion are not immediately taxed — instead, they count against your lifetime gift and estate tax exemption ($13.61 million per person in 2024). Gift tax is only owed if you exhaust the entire lifetime exemption. Annual exclusion gifting is a powerful strategy to gradually transfer wealth to heirs, especially for assets expected to appreciate.
Frequently Asked Questions
No. Gifts within the annual exclusion do not require filing Form 709. Only gifts exceeding the annual exclusion per recipient trigger a filing requirement.
Yes. 529 plans allow superfunding — contributing up to 5 years of exclusions at once ($90,000 per donor per beneficiary in 2024) and electing to treat it as spread over 5 years for gift tax purposes.