Gift tax 2026: the $19,000 exclusion and $15 million

Two numbers to know

A yearly amount per person, and a lifetime amount.

The IRS lists the annual exclusion in its gift tax questions and answers and the basic exclusion by year on its estate and gift tax “What’s new” page: Public Law 119-21 raised it to $15,000,000 for 2026. The annual exclusion applies to each recipient separately, so a parent can give $19,000 to each of three children in 2026, $57,000 in all, with no return.

What counts as a gift

Anything given without full value in return.

The IRS definition is broad: any transfer to an individual, directly or indirectly, where full consideration in money or money’s worth is not received in return. Cash, a car, or a share of a house can be a gift, and the IRS notes that selling something for less than its full value, or making an interest-free or reduced-interest loan, may be one too. What matters is the value at the time of the gift; the IRS defines fair market value as the price between a willing buyer and a willing seller, neither under compulsion and both knowing the facts.

Gifts that never count

Four exceptions, whatever the amount.

According to the IRS, these are generally not taxable gifts, at any size:

• gifts up to the annual exclusion for the year, per recipient;
• tuition or medical expenses you pay for someone — the educational and medical exclusions;
• gifts to your spouse;
• gifts to a political organization for its use.

Gifts to qualifying charities are deductible from the value of gifts made.

When a return is due, and when tax is

Filing Form 709 does not mean paying tax.

Give one person more than $19,000 in 2026, outside those exceptions, and you generally file Form 709, the gift tax return, for that year. The excess is not taxed then: it is subtracted from your $15,000,000 basic exclusion, which estate and lifetime gifts share. Only when lifetime taxable gifts and the estate together exceed the exclusion is tax due, and the donor, not the recipient, is generally responsible for paying it.

A married couple can each use an annual exclusion for the same recipient, $38,000 in 2026; the Form 709 instructions explain gift splitting for gifts that come from one spouse’s money. Form 709 can be e-filed through the IRS Modernized e-File system.

Gifts and income tax

No deduction for the giver, no income for the receiver.

Making a gift, or leaving an estate to heirs, does not ordinarily affect federal income tax, and the giver cannot deduct a gift other than a deductible charitable contribution. Money from family and friends sent through a payment app as a gift should not be reported on Form 1099-K either; see what Form 1099-K reports. Several states have their own estate or inheritance taxes with lower thresholds, and large or complicated transfers are where the IRS itself suggests talking to an attorney, CPA, or enrolled agent.