Gift Tax Limits, Exclusions, and Rules for 2026

D-Keine / Unsplash

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

Most people will not owe federal gift tax in 2026. The IRS allows generous annual and lifetime exemptions, which means gift tax applies only to very large transfers made by high-net-worth households–not everyday gifts to family or friends.

In 2026, you can give up to $19,000 per recipient without filing a gift tax return. Even gifts above that amount usually don’t trigger tax, because gift tax isn’t owed unless your total lifetime gifts exceed $15 million. Only the amount above that threshold is taxed, at rates of up to 40%.

What Is the Gift Tax?

The gift tax is a federal tax on money or property you give away without receiving something of equal value in return. The tax responsibility falls on the giver — not the recipient — and in most cases, no tax is owed. However, larger gifts may still need to be reported to the IRS using Form 709, even if no tax is ultimately due.

Gift Tax At A Glance

• The person giving the gift — not the recipient — is responsible for any gift tax
• Gifts that fall within the annual exclusion don’t need to be reported to the IRS
• Gifts above the annual limit must be reported on IRS Form 709, but tax is only owed if your total lifetime gifts exceed the exemption

Gift Tax Limits for 2025 and 2026

The federal gift tax has two key thresholds to know: the annual exclusion, which determines how much you can give to one person each year without reporting it, and the lifetime gift and estate exemption, which sets the total amount you can give over your lifetime before any gift tax is owed. For most people, these limits are high enough that gift tax is never a concern.

These limits are adjusted for inflation by the Internal Revenue Service and reviewed annually. However, the One Big Beautiful Bill Act locked in updated exemption levels starting in 2025, providing more certainty around how much individuals can give without triggering gift or estate taxes.

How Gift Tax Rates Work

Federal gift tax rates are progressive, ranging from 18% to 40%, but most people never reach them. These rates apply only after you’ve used your $15 million lifetime gift and estate exemption per person.

To see how this works in practice, imagine you give $16 million over your lifetime. In 2026, the first $15 million would be covered by the lifetime exemption, and only the remaining $1 million would be subject to gift tax.

It’s also worth noting that filing IRS Form 709 doesn’t automatically trigger a tax bill. In most cases, the form simply tracks how much of your lifetime exemption you’ve used. You’re required to file it when you give more than $19,000 to any one person in a single year in 2025 or 2026–even if no gift tax is ultimately owed.

2026 Annual Gift Tax Exclusion: How It Works

You can give up to $19,000 per person in 2026 without owing gift tax or filing IRS Form 709. This limit applies to each recipient individually, so giving to multiple people can significantly increase the total amount you gift tax-free. Married couples can also split gifts, allowing them to give up to $38,000 per recipient in a single year.

What to know about the annual exclusion:

• The annual limit is $19,000 per recipient in both 2025 and 2026
• The limit applies per person, per year, not per household
• The exclusion resets every calendar year, creating new gifting opportunities
• Gifts above the limit require filing Form 709, but typically no tax is owed
• Any amount over the limit simply reduces your $15 million lifetime exemption

What Happens When You Exceed the Annual Gift Limit

The lifetime gift tax exemption comes into play only after you exceed the annual limit. For 2026, the exemption is $15 million per person, or $30 million for married couples, and it covers the total value of taxable gifts made over your lifetime.

A simple way to think about it:

• Lifetime gifts under $15 million: No gift tax owed
• Lifetime gifts over $15 million: Gift tax applies only to the excess, at rates up to 40%

6 Smart Ways To Avoid Paying Gift Tax

Most people can give generously without ever paying gift tax by using these strategies:

• Keep gifts under the $19,000 annual limit per recipient
• Split gifts with a spouse to double the annual exclusion
• Spread gifts over multiple years to take advantage of annual resets
• Pay tuition or medical bills directly to the provider–these gifts are unlimited and not reportable
• Use 529 plan super funding to front-load five years of gifts (reportable, but typically not taxable)

Real-Life Gift Tax Scenarios

Gift tax rules can feel abstract until you see how they work in everyday situations. These examples show how common gifts are treated–and why most people still don’t owe any tax.

Helping With a Down Payment

You give your child $100,000 in 2026 to help buy a home.

• The first $19,000 falls under the annual exclusion
• The remaining $81,000 must be reported on IRS Form 709
• No gift tax is owed, but your lifetime exemption is reduced to $14,919,000

The key takeaway: large one-time gifts usually affect paperwork, not your tax bill.

Gifting Stock

You transfer $50,000 worth of stock to a sibling.

• $31,000 is reported because it exceeds the annual exclusion
• Your lifetime exemption is reduced by that amount
• Your sibling inherits your original cost basis, which matters later if they sell the stock and owe capital gains tax

This is a good reminder that gifting assets can have tax consequences for the recipient down the line.

Paying Tuition

You pay tuition directly to the school.

• There’s no dollar limit
• The gift is not reportable
• It does not count against your annual or lifetime exemption

As long as the payment goes straight to the educational institution, tuition gifts are one of the most tax-efficient ways to help family members.

When A Gift Requires Filing IRS Form 709

Most gifts don’t trigger a tax bill, but some do require paperwork. IRS Form 709 is used to report certain gifts so the IRS can track your use of the annual and lifetime exemptions.

You’re required to file Form 709 if any of the following apply:

• You gave more than $19,000 to one person in 2025 or 2026
• You and your spouse elected to split gifts, even if no tax is owed
• You made future-interest gifts, such as certain transfers to trusts that don’t provide immediate access to the funds
• You used any portion of your lifetime gift and estate tax exemption

What You’ll Need:

• Recipient’s name and relationship
• Fair market value of the gift
• Documentation or appraisals (if needed)
• Spousal gift-splitting statement
• Submit with your tax return (by April 15, or with an extension)

Common Ways To Gift Without Owing Gift Tax

Most people never pay gift tax because the IRS allows several straightforward strategies to reduce or eliminate it entirely. The chart below summarizes the most common gifting approaches and how they’re treated for tax purposes.

Should You Worry About Gift Tax?

For most people, the answer is no. With a $19,000 annual exclusion and a $15 million lifetime exemption in 2026, the federal gift tax affects only a small number of very high-net-worth households. Even the top gift tax rate of 40% applies only after those generous thresholds are exceeded.

That means you can usually give generously–whether to family, friends, or loved ones–without owing gift tax, as long as you understand the basic rules and reporting requirements.

Smart next steps to consider

• Make sure IRS Form 709 is filed correctly if you give more than the annual limit in a single year
• Work with a CPA or estate planner to coordinate gifting with your long-term financial and estate plans
• Use direct payments for tuition or medical expenses to give without triggering gift tax or reporting

Share This Article: