2026 gift tax at a glance
| Annual exclusion, per recipient | $19,000 |
| Annual exclusion for a married couple splitting gifts | $38,000 |
| Lifetime gift and estate tax exemption, per person | $15,000,000 |
| Lifetime exemption for a married couple | $30,000,000 |
| Gifts to a U.S. citizen spouse | Unlimited |
| Tuition and medical bills paid directly | Unlimited |
| Top gift tax rate (above the exemption) | 40% |
| Pennsylvania gift tax | None |
Federal figures per IRS Revenue Procedure 2025-32. The lifetime exemption is indexed for inflation after 2026.
How the gift tax actually works
The federal gift tax has two layers, and most people only ever touch the first:
- The annual exclusion. You can give up to $19,000 to as many people as you like in 2026 without filing anything. A couple can give $38,000 to each person. Unused exclusion does not carry forward; it resets every January 1.
- The lifetime exemption. Gifts above the annual exclusion are reported on Form 709 and subtracted from your $15 million lifetime exemption, which is shared with your estate tax exemption. You owe gift tax only after you have given away more than that over your lifetime.
So “paying gift tax” and “filing a gift tax return” are different things. A $100,000 gift to a child requires a return, but almost never a check to the IRS. The giver, not the recipient, files and would owe any tax.
Gifts that never count
- Tuition paid directly to a school, at any level, in any amount. Room, board, and books do not qualify.
- Medical expenses paid directly to a provider, including health insurance premiums.
- Gifts to your spouse, if your spouse is a U.S. citizen. Gifts to a non-citizen spouse have a separate, higher annual limit.
- Gifts to qualified charities.
Writing the check to the school or hospital is essential. Giving a grandchild money to pay tuition counts as an ordinary gift.
A worked example
In 2026, a married Pennsylvania couple gives their daughter $100,000 toward a home and pays $60,000 of a grandson’s college tuition directly to the university.
| Gift | Amount | Federal treatment |
|---|---|---|
| Cash to daughter | $100,000 | $38,000 excluded with gift splitting; $62,000 reported on Form 709 ($31,000 per parent) |
| Tuition paid to the university | $60,000 | Excluded in full; not reported |
| Gift tax owed | $0 | Each parent’s remaining exemption: about $14,969,000 |
Each parent files a Form 709 for 2026 by April 15, 2027. No tax is due, but the returns create a record of the exemption used, which matters later for the estate tax return.
The Pennsylvania one-year rule
Pennsylvania has no gift tax, but gifts made within one year of death are generally pulled back into the estate for Pennsylvania inheritance tax, to the extent they exceed $3,000 per recipient. If the parent who made the $100,000 gift died within a year, roughly $97,000 could be taxed at 4.5%, about $4,365. Gifts made earlier are generally outside the tax. See our Pennsylvania inheritance tax guide.
Hypothetical and simplified for illustration.
When you must file Form 709
Form 709, the gift tax return, is required for 2026 if any of these apply:
- You gave any one person (other than a U.S. citizen spouse) more than $19,000.
- You and your spouse want to split gifts, even if each half is under $19,000.
- You gave a future interest, which includes many gifts to trusts, even small ones.
- You want to superfund a 529 plan by spreading up to five years of exclusions ($95,000, or $190,000 for a couple) into one year.
The return is due April 15 of the year after the gift, and extending your income tax return also extends Form 709. Missing a required return is a common oversight, and it can complicate the estate tax return later.
Giving appreciated assets: the step-up trade-off
When you give someone stock, real estate, or another appreciated asset, they take over your original cost basis. If they sell, they owe the capital gains tax you would have owed. If they inherit the same asset at your death instead, its basis generally steps up to market value, wiping out the built-in gain.
- Give cash or high-basis assets during life when possible, and hold low-basis assets for heirs to inherit.
- Giving appreciated assets can still make sense when the recipient is in a lower tax bracket, or when the goal is to move future growth out of a large estate. Watch the “kiddie tax,” which taxes much of a child’s investment income at the parents’ rate.
- Gifts of property worth less than what you paid have special basis rules; selling first and gifting the cash is often better.
Gifting as an estate planning tool
With the federal exemption at $15 million per person in 2026, most families give for reasons other than estate tax: helping children buy a home, funding education, or seeing heirs enjoy the money. Larger estates still use gifts deliberately: annual exclusion gifts year after year, funding trusts for children or grandchildren, or moving assets expected to grow sharply, such as a business interest, before they appreciate. Gifts to grandchildren can also use the generation-skipping transfer tax exemption, which matches the $15 million estate exemption in 2026. Our guides to revocable vs. irrevocable trusts and GRATs cover those structures, and the estate tax estimator shows whether federal estate tax is a factor for you.
Frequently asked questions
How much can you gift tax-free in 2026?
In 2026 you can give up to $19,000 per recipient without filing a gift tax return, and a married couple can give $38,000 per recipient by splitting gifts. Gifts above that amount are reported on Form 709 and reduce your $15 million lifetime exemption, but no gift tax is owed until total lifetime taxable gifts exceed that exemption.
Who pays the gift tax, the giver or the recipient?
The person making the gift is responsible for filing Form 709 and paying any gift tax. The recipient generally owes no federal income tax or gift tax on a gift received. Because of the $15 million lifetime exemption in 2026, very few people ever actually pay gift tax.
When do I need to file Form 709?
File Form 709 if you gave any one person more than $19,000 in 2026 (other than your U.S. citizen spouse), if you and your spouse elect to split gifts, if you made a gift of a future interest such as many gifts to trusts, or if you elect to spread a large 529 contribution over five years. The return is generally due April 15 of the following year, and extending your income tax return also extends Form 709.
Are tuition and medical bills subject to gift tax?
Not if you pay them directly. Tuition paid directly to a school and medical expenses paid directly to a provider are excluded from gift tax without limit and do not count against the $19,000 annual exclusion or your lifetime exemption. Giving the money to the person to pay the bill does not qualify.
Does Pennsylvania have a gift tax?
No. Pennsylvania does not have a gift tax. However, gifts made within one year of death are generally pulled back into the estate for Pennsylvania inheritance tax to the extent they exceed $3,000 per recipient, so a large gift made shortly before death may still be taxed at rates such as 4.5% for children.