Federal Annual Gift Tax Exclusion for 2025
Federal law imposes a tax on gifts made in excess of a specific amount in a calendar year to a specific recipient (known as a “donee”). That tax is usually paid by the donor (the giver) of the gift. The specific amount is known as the annual gift exclusion. The annual gift exclusion is $18,000 for 2024. For 2025, the annual gift exclusion increases to $19,000. The gift can be any type of property, including money.
The annual gift exclusion is applied to each donee. For example, assume that in 2025 you give gifts totaling $19,000 to each of three people, for a total of $57,000. (This might be done in a single gift to each person or a series of gifts so long as the annual total to each person is not greater than $19,000.) The annual gift exclusion would apply to each person. As a result, there would not be any federal gift tax payable. Now, assume instead that in 2025 you give gifts totaling $19,000 to each of three people and a gift of $25,000 to a fourth person. The gifts of $19,000 to the three people and the first $19,000 of the gift to the fourth person would not be taxable gifts because they would each be less than or equal to the annual gift exclusion. However, the additional $6,000 of the gift to the fourth person would be a “taxable” gift because it would be in excess of the annual gift exclusion to that donee. However, there may not be any gift tax payable because of application of the lifetime gift exclusion amount. If the taxable gift to the fourth person did not result in using up your remaining lifetime gift exclusion amount, there would be no gift tax payable, but the amount of the taxable gift would reduce the remaining portion of your lifetime gift exclusion amount. Although there may not be gift tax payable, there would be an obligation to file a federal gift tax return to reflect the amount of the taxable gift or gifts made. Note that the state of Washington does not impose a gift tax.
If you need assistance with your estate planning, contact one of the attorneys in Beresford Booth’s Estate Planning and Probate Group at info@beresfordlaw.com or by phone at (425) 776-4100.
