Annual Gift Tax Exclusion.
In plain English
The annual gift tax exclusion is a dollar limit set each year by the IRS for how much you can give to any one person without tax consequences. Gifts under that limit per recipient do not require a gift tax return and do not count against your larger lifetime estate and gift exemption. The limit is per recipient, so you can give the full amount to as many different people as you like in the same year. Gifts above the limit are not automatically taxed, but they require a gift tax return and chip away at your lifetime exemption.
01Why it matters
If you are helping family with money or moving wealth to your kids, staying under the yearly limit per person keeps things simple, with no return to file and no effect on what you can pass on tax-free later.
02The math, step by step
For 2026, the exclusion is $19,000 per recipient (the same as 2025, confirmed by the IRS gift tax FAQ), so you could give each of your three children $19,000, a total of $57,000, with no gift tax return required. A married couple can each give that amount to the same person, effectively doubling it. The figure is adjusted for inflation, so check the current year before relying on it.
03What this is NOT
Going over the annual exclusion does NOT mean you owe gift tax that year. It usually just means you file a gift tax return and reduce your lifetime exemption. Most people never actually pay gift tax because the lifetime exemption is very large.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
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