What is the Gift Tax Exclusion for 2024
Gifting your loved ones with cash is one of the most generous things you can do. And depending on the amount, you may be able to give it tax-free.
The gift tax exclusion, also called the gift tax limit, is the maximum amount you can give away without receiving a tax bill. With this rule, you can support friends and family without worrying about an extra bill.
Let’s discuss everything you need to know about the gift tax exclusion.
What Is the Gift Tax?
The gift tax is a specific tax that individuals face when they transfer money or property to another person without receiving the full value of their gift in return. Did you send money for your grandchildren’s car fund? Did you give a sizeable cash wedding gift to your best friend? These are the types of gifts that could potentially end up on the IRS’s radar.
Add Your Heading Text Here Gift Tax Exclusion
The gift tax exclusion is the amount of money you can give away without incurring any gift tax liability. There’s both a yearly and an annual limit. If your gifts stay below these limits, you will not have to pay taxes.
Annual
For 2024, the current annual gift tax exclusion is $18,000 per individual and $36,000 for married couples filing jointly. This limit applies to each recipient; it doesn’t restrict your total spend. If you gave $18,000 to your cousin, another $18,000 to your grandparents, and $10,000 to a friend, you don’t have to alert the IRS.
In 2025, the annual gift tax exclusion will rise to $19,000.
Lifetime
If you gave someone more than $18,000 in 2024, you will likely still not have to pay taxes. You’ll just need to file a gift tax return for the excess amount. That amount will then be deducted from your lifetime estate and gift tax limit.
If your giving surpasses the lifetime limit, you’ll need to pay taxes. The lifetime gift tax exclusion is $13.61 million in 2024 and will increase to $13.99 million in 2025.
What Gifts Qualify?
The gift tax exclusion covers more than just cash. Stocks, bonds, cars, and real estate are all examples of assets that could be subject to the gift tax. This is true even if the gift’s exact value is hard to determine.
What Gifts Are Exempted?
Some gifts don’t count toward the gift tax limit.
Education exemption
Are you paying for someone to go to school? You don’t have to report tuition payments if the money is paid directly to the institution.
Medical exemption
A similar rule applies if you’re paying for a loved one with medical needs. Money given to hospitals or doctors’ offices doesn’t count toward the annual limit.
Tax Implications for Recipients
Gift tax responsibilities fall solely on the giver. The recipient is not involved and can generally receive their gift tax-free. There are a few exceptions, however. For instance, anyone receiving stocks could face interest or dividend taxes.
Lifetime Estate and Gift Tax Exemption Changes in 2026
The current lifetime estate and gift tax exemption is set by the 2017 Tax Cuts and Jobs Act. This law expires in 2026, and when it does, the exemption will revert to 2017 levels. A single person will be able to give away an estimated $7 million tax-free rather than the current $13.6 million.
It’s possible that lawmakers will work to protect the higher limits.
Conclusion
If you have assets to share, the gift tax exclusion can save you a lot of money. To maximize the benefits, consult with experts like the team at Kondler & Associates, CPAs. We’ll help you break down your finances and gifts so you can give freely without unexpected taxes. Give us a call today.
