What is the annual gift tax exclusion amount?

What the Law Says

The annual gift tax exclusion is set by the Internal Revenue Code and adjusted each year for inflation. While 26 U.S.C. § 2010 governs the unified credit against estate tax (which covers both lifetime gifts and estates), the annual exclusion itself is codified in 26 U.S.C. § 2503(b). However, since only § 2010 was provided in the prompt, we reference its key statutory language about the unified credit — which determines how much of your lifetime exemption is reduced when you make taxable gifts beyond the annual exclusion.

The annual gift tax exclusion allows individuals to give up to a certain amount each year to any number of people without triggering gift tax or using any of their lifetime unified credit. For 2024, that amount is $18,000 per recipient. This exclusion is separate from—and does not reduce—the lifetime unified credit, which in 2024 is $13.61 million per individual.

Gifts exceeding the annual exclusion are considered 'taxable gifts' and must be reported on IRS Form 709. They reduce the taxpayer’s remaining unified credit under § 2010 — meaning they lower the amount exempt from estate tax at death.

The unified credit is designed to prevent double taxation: gifts made during life and assets transferred at death are both counted against the same lifetime exemption pool.

Statutory Text

The credit allowed by this section shall be an amount equal to the tentative tax which would be determined under section 2001(c) on a taxable estate equal to the basic exclusion amount.

— 26 U.S.C. § 2010(a) — Unified credit against estate tax

What to Do

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