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For many people, a core motivation behind earning and saving is the desire to pass on wealth to future generations. Helping a child make a down payment on a home or setting up a college fund for a grandchild can often feel more meaningful than anything you might do for yourself. Personally, I’ve always believed that if you’re in a position to help a loved one financially during your lifetime, it’s far more impactful than leaving money as an inheritance after you’re gone.

When I have these conversations, the Annual Gift Tax Exclusion almost always comes up. For 2025, the exclusion is $19,000 per recipient. [1] That means you can give up to $19,000 to anyone in a calendar year without needing to report it to the IRS.

Here is where things often get confusing:

Giving more than $19,000 is usually not a taxable event either.

 

Here’s how it works:

  • Each person has a lifetime gift and estate tax exclusion of $13.99 million (as of 2025). [2][3] A couple will have a lifetime exclusion of $27.98 million and it is transferable amongst spouses. [3][5]
  • Gifts over the $19,000 annual exclusion simply reduce this lifetime exemption. [2]
  • No tax is due at the time of the gift — by the giver or the recipient — unless you’ve already exceeded that $13.99 million total.

 

So:

  • Gifts under $19,000 per person per year require no reporting and do not count against your lifetime exemption. A married couple can give up to $38,000 to a single recipient.
  • Gifts over $19,000 must be reported to the IRS using Form 709 [2][3] but don’t trigger a tax bill unless you’ve used up your full lifetime exemption.

 

The Main Point

Don’t be deterred by the $19,000 figure. In many cases, you can gift more than that in a year — it just needs to be documented properly.

 

A very important Final Note

This discussion only applies to federal estate and gift tax. States have their own rules, and not all conform to the federal system, so it’s worth checking your state’s laws before making significant gifts. If you do have a desire to setup a gifting strategy, make sure you meet with a qualified Estate Planning attorney and tax specialist before making any gifts.

References

1. IRS, ‘What’s New – Estate and Gift Tax,’ https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax (accessed July 2025).

2. IRS, ‘Gift Tax: Do I Have to Pay Gift Tax?’ https://www.irs.gov/businesses/small-businesses-self-employed/gift-tax (accessed July 2025).

3. Kiplinger, ‘Gift Tax Exclusion 2025: How It Works, Limits, and Who Pays,’ https://www.kiplinger.com/taxes/gift-tax-exclusion (accessed July 2025).

4. Spencer Fane, ‘Updated Inflation Adjustments for Gift Tax Annual Exclusion, Unified Credit Amount, and GST Tax Exemption for 2025,’ https://www.spencerfane.com/insight/updated-inflation-adjustments-for-gift-tax-annual-exclusion-unified-credit-amount-and-gst-tax-exemption-for-2025/ (accessed July 2025).

5. Mariner Wealth Advisors, ‘Transfer Wealth Before Lifetime Estate Tax Exemption Expires in 2025,’ https://www.marinerwealthadvisors.com/insights/transfer-wealth-before-lifetime-estate-tax-exemption-expires-in-2025/ (accessed July 2025).