Two exclusions do most of the work
The federal gift and estate taxes are a single, unified system, and two exclusions keep most families out of it. The annual exclusion lets you give a set amount to each recipient every year free of gift tax — though a return can still be required (see below). The lifetime exemption shelters a very large cumulative total of gifts and bequests above the annual amount before any tax is due. Only transfers beyond both are taxed — which is why, for most people, “gift tax planning” is really about paperwork and basis, not about paying gift tax.
The 2026 numbers
For 2026, the annual gift-tax exclusion is $19,000 per recipient, the special annual exclusion for gifts to a noncitizen spouse is $194,000, and the federal basic exclusion amount and GST exemption are each $15,000,000. Current law contains no scheduled post-2026 sunset; inflation adjustments resume for 2027 and later years. The top federal estate and gift-tax rate remains 40%.
| Allowance (2026) | Amount | Authority |
|---|---|---|
| Annual gift-tax exclusion (per recipient) | $19,000 | IRC § 2503(b); Rev. Proc. 2025-32 |
| Annual exclusion for gifts to a non-citizen spouse | $194,000 | IRC § 2523(i); Rev. Proc. 2025-32 |
| Lifetime gift & estate tax exemption (per person) | $15,000,000 | IRC § 2010(c)(3); P.L. 119-21 |
| Generation-skipping transfer (GST) exemption | $15,000,000 | IRC § 2631; Rev. Proc. 2025-32 |
| Top federal gift/estate tax rate (above the exemption) | 40% | IRC § 2001(c) |
Sources: Internal Revenue Code sections as linked on the detailed pages; Rev. Proc. 2025-32 (2026 inflation adjustments); Public Law 119-21 (2025), which set the $15,000,000 basic exclusion; IRS, “What’s New — Estate and Gift Tax.” Figures are for 2026 and are re-verified on each annual adjustment.
The annual exclusion
For 2026 you can give up to $19,000 to each of any number of recipients without gift tax (IRC § 2503(b)). An annual-exclusion gift is not automatically exempt from reporting. Form 709 may still be required for gift splitting, future interests, the five-year § 529 election, QTIP or other elections, or other taxable gifts. Spouses may each make gifts from their own property or consent to split gifts under IRC § 2513; the exclusions do not combine automatically. There is also a separate, unlimited exclusion for tuition and medical expenses paid directly to the school or provider (§ 2503(e)) — a powerful and underused tool. The annual-exclusion page covers the present-interest requirement, gift-splitting, and the direct-payment exclusion in full.
Read: the annual gift-tax exclusion →
The lifetime exemption
Above the annual exclusion, gifts draw against a single lifetime exemption shared by the gift and estate taxes. For 2026 it is $15,000,000 per person; current law contains no scheduled post-2026 sunset, and inflation adjustments resume for 2027 and later years (IRC § 2010(c); Public Law 119-21). Portability preserves a deceased spouse’s unused exclusion only if the estate makes a valid election on Form 706, subject to the last-deceased-spouse rules. Couples can also use both spouses’ exclusions through lifetime gifts or trust planning. The lifetime-exemption page explains portability, the deceased-spousal unused exclusion, and why the old “clawback” concern no longer applies.
Read: the lifetime exemption in 2026 →
Basis: the quiet variable that changes everything
Here is the idea that most gifting advice buries. When you give an appreciated asset during life, the recipient takes your original cost basis (IRC § 1015) — and inherits all the unrealized capital gain with it. When you leave that same asset at death, it instead takes a basis adjustment under IRC § 1014— a step up or a step down, subject to the statute’s categories and exceptions.
Gifting vs. inheriting
Putting the exemptions and basis together answers the practical question families actually ask: should I give this now or leave it at death? For estates above the exclusion, gifting can move future appreciation out of the estate and genuinely save estate tax. For the many estates below it, the basis step-up usually wins, and the better move is often to hold the appreciated asset and let it pass at death. The gift-versus-inherit page works a clearly hypothetical example both ways. And a loan, rather than a gift, is sometimes the right tool entirely — see intra-family loans.
Read: gifting vs. inheriting → · Read: intra-family loans →
None of this is one-size-fits-all; the right answer depends on the size of the estate, the basis in each asset, and state law. If you want a professional to run your own numbers, our directory of estate-planning professionals lists people you can verify yourself.
Common questions
Do I owe gift tax when I give someone money?
Almost never. Gifts within the annual exclusion — $19,000 per recipient for 2026 — are not taxed, and usually need not be reported. An annual-exclusion gift is not automatically exempt from reporting. Form 709 may still be required for gift splitting, future interests, the five-year § 529 election, QTIP or other elections, or other taxable gifts. Gifts above that amount are reported on a gift-tax return (Form 709) but still are not taxed until your cumulative taxable gifts exceed the lifetime exemption, which is $15,000,000 per person for 2026. So gift tax itself is owed only after cumulative taxable gifts pass that $15,000,000 threshold; below it, a larger gift is reported on Form 709 and reduces the remaining exemption without tax being due (IRC §§ 2503, 2010; Rev. Proc. 2025-32).
Is the person who receives a gift taxed on it?
No. A gift is excluded from the recipient's gross income (IRC § 102(a)). Gift tax, when it applies at all, is the giver's responsibility, not the recipient's. What the recipient does inherit is the giver's cost basis in the asset (IRC § 1015) — which is the whole reason gifting appreciated property during life can be worse for the family than leaving it at death.
Did the exemption drop in 2026?
No — the opposite. Under prior law the elevated exemption was scheduled to fall by roughly half after 2025. The 2025 legislation (Public Law 119-21) removed that sunset and set the basic exclusion at $15,000,000 per person for 2026, indexed for inflation going forward (IRC § 2010(c)(3); IRS, “What's New — Estate and Gift Tax”). The old worry about a scheduled decrease is now settled.
Sources & methodology
Methodology & sources
Every figure on this page is cited in place to a primary source: the Internal Revenue Code (U.S. House Office of the Law Revision Counsel), Rev. Proc. 2025-32 for the 2026 inflation adjustments, Public Law 119-21 for the $15,000,000 basic exclusion, and the IRS’s own “What’s New — Estate and Gift Tax” summary. Statutory links point to the official government source rather than an unofficial mirror. The 2026 figures — $19,000 annual exclusion, $194,000 non-citizen-spouse exclusion, $15,000,000 lifetime and GST exemptions — are re-verified on each annual adjustment. See our editorial standards.
This page is educational and is not legal or tax advice. Gift and estate planning turns on your own assets, basis, and state law; use this to understand the moving parts and to know what to ask a qualified advisor.
Last verified July 29, 2026.
Corrections & updates
- — Legal-accuracy corrections applied and verified against official primary sources (Wave E-1 correction pass): replaced the \"permanent\" exemption language with a no-scheduled-post-2026-sunset statement and the 2027 inflation-adjustment mechanism; clarified that an annual-exclusion gift can still require Form 709 and that spouses' exclusions do not combine automatically (each must make the gift or consent to split under IRC § 2513); noted that portability requires a Form 706 election and is not the only way a couple can use both exclusions; and added that property acquired from a decedent can take a stepped-down as well as a stepped-up basis under IRC § 1014, subject to exceptions and valuation elections. Statutory links repointed to official government sources.
- — Re-review pass: deleted the superseded categorical that a gift within the annual exclusion means 'no return' for the 'overwhelming majority' — the passage now states that an annual-exclusion gift can still require Form 709 (gift splitting, future interests, the § 529 five-year election, and other reportable gifts).
- — Reviewer attribution activated (Evan Miller, Esq., Florida Bar No. 112646) and the page-level and related-card verification dates refreshed to July 29, 2026, per the signed Final URL Approval Memorandum.