Gift Tax Annual Exclusion 2027: Limits, Rules & the OBBBA Exemption

Gift Tax in 2026: Annual Exclusion, Lifetime Exemption & the OBBBA

The US gift tax limits how much you can give to any individual each year without using your lifetime exemption — and without filing a gift tax return. For 2026, that annual exclusion is $19,000 per recipient, meaning you can give up to $19,000 to as many people as you like without any gift tax consequences. Married couples can combine their exclusions for $38,000 per recipient.

The One Big Beautiful Bill Act (OBBBA) signed in July 2025 made a critical change to the lifetime exemption: instead of sunsetting to approximately $7 million in 2026 as scheduled, the exemption is now permanently set at approximately $15 million per person. This guide explains how the annual exclusion and lifetime exemption interact, what the OBBBA changed, and the key strategies for tax-efficient giving in 2026 and 2027.

2026 and 2027 Annual Gift Tax Exclusion: The Numbers

The gift tax annual exclusion is the amount you can give to any individual in a calendar year without triggering gift tax reporting or using any of your lifetime exemption. For 2026, the exclusion is $19,000 per recipient — unchanged from 2025. The exclusion increased from $18,000 to $19,000 between 2024 and 2025 due to inflation adjustments.

The exclusion is adjusted in $1,000 increments based on the Consumer Price Index. Whether it increases for 2027 depends on inflation between September 2024 and September 2026. The IRS typically announces the following year's adjustments in autumn of the current year (usually October or November). Based on current inflation trends, the 2027 exclusion is projected to be $19,000 or $20,000. Check IRS Revenue Procedure announcements in autumn 2026 for the confirmed 2027 figure.

Historical context: the annual exclusion was $15,000 from 2018 to 2021, rose to $16,000 in 2022, $17,000 in 2023, $18,000 in 2024, and $19,000 in 2025–2026. The trend over the medium term has been upward.

There is no limit on the number of recipients. You can give $19,000 to 10 people, 50 people, or 100 people in the same year — each gift is evaluated separately. Gifts below the annual exclusion per recipient require no Form 709 and do not reduce your lifetime exemption.

The OBBBA and the $15 Million Lifetime Exemption

The gift tax and estate tax share a unified lifetime exemption — also called the basic exclusion amount. When you make taxable gifts above the annual exclusion during your lifetime, you draw down this lifetime exemption. Whatever is left at death is available against your estate.

What Would Have Happened Without the OBBBA

The 2017 Tax Cuts and Jobs Act doubled the lifetime exemption from approximately $5.5 million to $11.18 million per person, with inflation adjustments. By 2025, the exemption had reached approximately $13.6 million per person. However, TCJA scheduled this higher exemption to expire after December 31, 2025. On January 1, 2026, the exemption would have reverted to the pre-TCJA level — estimated at approximately $7,000,000 per person after inflation adjustment. For a married couple, combined exemption would have dropped from roughly $27 million to $14 million.

What the OBBBA Changed

The One Big Beautiful Bill Act, signed July 4, 2025, made a higher, permanent exemption the law. The lifetime gift and estate tax exemption is now set at approximately $15,000,000 per person, inflation-adjusted going forward, with no sunset date. For married couples using portability, the combined exemption is approximately $30,000,000.

This matters for planning certainty. Prior to the OBBBA, advisers recommended clients consider accelerating large gifts before a potential 2026 exemption reduction. That urgency is now gone — the higher exemption is permanent. Taxable gifts above $19,000 per recipient are still reported on Form 709 and draw down the lifetime exemption, but no gift tax is actually owed until the cumulative total of taxable gifts exceeds ~$15,000,000.

How Gift Giving Works in Practice: Limits, Reporting, and Taxes

Understanding the mechanics of gift tax avoids unnecessary worry and unnecessary Form 709 filings.

The $19,000 Annual Exclusion Per Recipient

You can give any individual up to $19,000 in 2026 without any reporting requirement. Gifts at or below this threshold per person are completely outside the gift tax system. The exclusion is per donor — so a married couple can each give $19,000 to the same recipient, for a combined $38,000 per recipient per year (this is called gift splitting, and requires Form 709 even though no tax is due).

Gifts Above $19,000: Form 709 but Usually No Tax

If you give more than $19,000 to a single recipient in one year, the excess is a taxable gift — but that does not mean you owe gift tax immediately. The excess reduces your lifetime exemption (~$15,000,000 under OBBBA). For example, giving $119,000 to your child uses $19,000 of annual exclusion and reduces your lifetime exemption by $100,000. You must file Form 709 (Gift Tax Return) to report this, but no tax is owed unless your cumulative taxable gifts exceed the lifetime exemption.

Spousal Gifts: Unlimited

Gifts between spouses who are both US citizens are completely unlimited — no annual exclusion limit, no lifetime limit, no Form 709 required. This is the marital deduction. For non-citizen spouses, the annual exclusion is much higher than the standard exclusion: $185,000 in 2025 (adjusted annually), but the unlimited marital deduction does not apply.

Gift Tax Rates

If you exceed the lifetime exemption, gift tax is assessed at rates from 18% to 40% on the excess. Most taxpayers will never reach the lifetime exemption, making gift tax a concern primarily for very high-net-worth individuals.

529 Superfunding, Charitable Gifts, and Special Exclusions

Several categories of gifts receive special treatment outside the standard annual exclusion framework.

529 Superfunding: Five-Year Election

Section 529 college savings plans allow a unique strategy called superfunding. You can make a one-time contribution of up to $95,000 per beneficiary (5 × $19,000 in 2026) to a 529 plan and treat it as if you made five equal $19,000 gifts spread over five years. This front-loads college savings while using only the annual exclusion — no lifetime exemption is consumed. You elect this treatment on Form 709. During the 5-year election period, you cannot make additional annual exclusion gifts to the same beneficiary. For married couples superfunding together, the limit doubles to $190,000 per beneficiary.

Medical and Tuition Direct Payment Exclusion

Payments made directly to a medical provider or educational institution on behalf of another person are excluded from gift tax entirely — with no dollar limit and no use of the annual exclusion or lifetime exemption. The key is that the payment must go directly to the institution, not to the individual who then pays the bill. Reimbursing someone for medical or tuition costs already paid does not qualify. This exclusion is unlimited: paying a grandchild's $80,000 annual university tuition directly to the university leaves your $19,000 annual exclusion fully available for other gifts to that grandchild.

Charitable Gifts

Gifts to qualifying 501(c)(3) organisations are deductible for income tax purposes and are not subject to gift tax. There is no dollar limit on charitable gift exclusions for gift tax purposes.

529 and ABLE Accounts

Contributions to ABLE accounts (tax-advantaged savings for individuals with disabilities) receive similar treatment to 529 accounts and have their own annual contribution limits set by the IRS.