Annual Gift Tax Exclusion in 2025

Each year, the IRS sets the annual gift tax exclusion, which allows a taxpayer to give a certain amount (in 2025, $19,000, up from $18,000 in 2024) per recipient tax-free without using up any of the taxpayer’s lifetime gift and estate tax exemption (in 2025, $13.99 million). For married couples, this means that they can give $38,000/year per recipient beginning next year without using any of their larger exemption.

Making annual gifts is certainly a lovely way to benefit loved ones, and it can also be an effective way to reduce one’s overall taxable estate. Note:  if you are not going to ever need all of your larger exemption to cover gifts during your lifetime and bequests at your death, you should not worry too much about limiting your annual gift per recipient to the amount of the annual gift tax exclusion.  If you go over that amount, just use some of your larger exemption that you were never otherwise going to use.

Some clients make annual exclusion gifts to their grandchildren as well as to their children, and some even make these gifts to spouses of their children.  Indeed, annual exclusion gifts can be made to anyone in the world to whom you choose to make gifts. One other note that might be of importance to our clients--the annual gift tax exclusion for gifts to non-US citizen spouses has increased from $185,000 to $190,000. This extra-large annual exclusion for gifts to a non-US citizen spouse is a small way of compensating for the fact that gifts to a non-US citizen spouse might otherwise subject to federal gift tax, while gifts to a US citizen spouse are exempt from gift tax in an unlimited amount.