Is Your Generosity Taxable? What to Know When Paying for a Wedding
Written by
G. Brian Davis
Edited by
Travis Woods
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Weddings are expensive enough without having to pay Uncle Sam his pound of flesh as well. If you’d like to contribute toward your child’s (or anyone else’s) wedding, consider the following to avoid gift taxes.
Annual Gift Tax Exclusion
In 2024, the IRS lets you give up to $18,000 to any individual, free of gift taxes. You can give multiple people tax-free gifts, each up to the $18,000 limit. When you give someone a gift under the annual limit, you do not have to report it to the IRS. Surpass the limit, and you have to file Form 709 with your tax return to report the gift. Technically, you could owe gift taxes ranging from 18-40% if you exceed the annual tax-free giving limit. But only if you’ve already used up your lifetime gift exemption.
Lifetime Gift Exemption
Over the course of your life (and death, in the form of your estate), the IRS lets you give away up to $13.61 million tax-free. At least, that’s the current limit in 2024.
In 2026, that limit is scheduled to drop. The Tax Cuts and Jobs Act of 2017 temporarily raised the limit, but the provision expires in 2026. Expect the lifetime gift exemption to cut in half from its current level at that time, if no legislation comes along in the meantime.
Not that you should kick the bucket early just to give away your estate tax-free.
If you exceed the annual tax-free gift exclusion, the overage simply gets applied to your lifetime exemption. Say you give your child $28,000 for their wedding, $18,000 of which is tax-free. The other $10,000 gets applied to your lifetime exemption of $13.61 million, leaving you with $13.6 million left to give away tax-free.
Ways to Avoid Gift Taxes for Wedding Expenses
Down to brass tacks: how to dodge the taxman if you want to contribute more than the annual gift exclusion to your child’s wedding?
Both Spouses Can Give
If you’re married, you and your spouse can each give your child up to $18,000 tax-free. That means you can collectively give up to $36,000 without paying Uncle Sam for gift taxes.
Both Spouses Can Receive
You can also provide a gift to your child’s fiance(e) tax-free. Although you may want to wait until after the wedding before reaching into your pocket, just to be sure they actually tie the knot.
Theoretically, married parents could therefore provide up to $72,000 tax-free.
Split Gifts Over Several Years
If the wedding is next year, you could give your child $18,000 tax-free this year, and another $18,000 next year (or whatever next year’s limit becomes).
Just beware that once you give a gift, you lose control over it. Your child could theoretically blow it on handbags or vacations or whatever else strikes their fancy.
Pay Wedding Vendors Directly
No one says you have to give the money to your children. You could just pay caterers, venues, bands, and other wedding expenses yourself, and gift taxes become a non-issue.
Final Thoughts
You almost certainly won’t have to pay gift taxes when you help your child with their wedding.
Stay within the lines of the annual gift exclusion if you can help it, and when in doubt, talk to an accountant about how to minimize taxes when you help your child with their nuptials.
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