Gift tax rules can be confusing, so it’s important to know when you need to file a tax form. With the 2025 tax season underway, understanding the basics can help avoid unnecessary complications.
In 2024, individuals could give up to $18,000 per recipient without reporting it to the IRS. This limit increased to $19,000 in 2025. If a person gives more than the annual limit to a single recipient, they may need to file IRS Form 709, though this does not necessarily mean they owe taxes.
Over a lifetime, individuals can give away up to $13.61 million in 2024, increasing to $13.99 million in 2025, before being required to pay gift taxes. Even if the annual exclusion is exceeded, taxes are only owed if the total lifetime gifts surpass this amount. However, this exemption is expected to decrease by half in 2026.
There are ways to give more without triggering gift taxes. One option is paying for someone’s education or medical expenses directly to the institution or provider, which exempts the amount from being counted as a taxable gift.
Gifts to a U.S. citizen spouse are generally tax-free. However, if the spouse is not a U.S. citizen, only $185,000 in 2024 could be given before reporting is required. Donations to charities are typically tax-deductible and do not need to be reported unless the donor retains an interest in the gifted property. Understanding these rules helps maximize tax-free gifting while avoiding unnecessary filings.
Read more: Will You Owe A Gift Tax This Year?