Annual Gift Tax Exclusion

The annual gift tax exclusion allows you to give up to a set dollar amount per recipient each year without incurring gift tax liability, reducing your lifetime exemption, or filing a gift tax return (Form 709). For 2025, the exclusion is $19,000 per recipient. There is no limit on the number of recipients — you could give $19,000 to 100 different people in the same year without any gift tax consequences.

Married couples can combine their exclusions through gift-splitting, allowing them to give up to $38,000 to each recipient in 2025. To use gift-splitting, both spouses must consent and one spouse must file Form 709 to elect it, even if no tax is owed.

The annual exclusion covers only gifts of a present interest — the recipient must have immediate use of the gift. Gifts of a future interest (such as contributions to some trusts) may not qualify for the exclusion and must instead be counted against your lifetime exemption. Direct payments for someone's tuition or medical expenses made directly to the institution are entirely excluded from gift tax beyond the annual exclusion.