What You Need to Know About Gift Tax

What is the Gift Tax?

The gift tax is a federal tax on the transfer of money or property when the recipient doesn't provide something of equal value in return. This could apply to giving cash, real estate, stock, or other assets.

There are two main limits that determine whether a gift may trigger IRS reporting or potential taxation:

• The annual gift tax exclusion
• The lifetime gift tax exemption

Understanding how these limits work can help you give generously—without any unpleasant tax surprises.

2026 Annual Gift Tax Exclusion

In 2026, you can give up to $19,000 per recipient without needing to report it to the IRS. If you're married, you and your spouse can each gift that amount to the same person, for a combined total of $38,000.

Key Notes:

• The limit is per person, not per total gifts. You could give the annual exclusion amount to your child, to your grandchild, and to a friend—all in 2026—without filing a gift tax return.
• If you want to combine your gift with your spouse's to give the double amount to one person, you can use a strategy called gift splitting. This requires filing IRS Form 709, even if no tax is owed.

Gifts to your spouse (if a U.S. citizen) are unlimited and generally don't require a gift tax return.

What If You Go Over the Limit?

Giving more than the annual exclusion amount to one person in 2026 doesn't mean you'll owe taxes—but it does mean you'll need to file Form 709 to report the gift. The amount that exceeds the annual limit simply counts against your lifetime exemption.

2026 Lifetime Gift Tax Exemption

The lifetime gift tax exemption allows you to give away a significant amount over your lifetime—beyond the annual limits—without paying gift tax.

In 2026, that limit is $15,000,000 per person.

For married couples, it's $30,000,000.

Let's say you give your adult child $50,000 in 2026. The first $19,000 is covered by the annual exclusion. The remaining $31,000 reduces your lifetime exemption—but no tax is due at the time.



Pro Tip: The IRS uses this same lifetime exemption for estate tax. Any amount you use for gifts during life reduces the amount that's shielded from estate tax when you pass away.

2026 Exemption Update

Good news for anyone planning large gifts or estate transfers: the steep cut to the lifetime exemption that was once expected for 2026 did not happen. Under the Tax Cuts and Jobs Act (TCJA), the doubled exemption introduced in 2018 was scheduled to expire after 2025, which would have lowered the exemption to roughly half its 2025 level.

Instead, Congress passed the One, Big, Beautiful Bill (OBBB), signed into law on July 4, 2025. The OBBB raised the basic exclusion amount to $15 million per person ($30 million for married couples) for 2026 — and made that higher amount permanent, with no scheduled sunset. The exemption will continue to be adjusted for inflation in future years.



For anyone who held off on major gifting or estate planning moves while waiting to see how this would shake out, the higher exemption is now locked in, providing more certainty for long-term planning.

Gifting and Fixed Indexed Annuities (FIAs)

At Summerlin Benefits Consulting, we specialize in what we call “safe money strategies”, one of which is Fixed Indexed Annuities (FIAs). Many of our clients own one or more fixed index annuities, so we will dive a little deeper into how gift tax rules may impact those with annuities.

Gifting Funds Into an Annuity

If you give someone money to fund an annuity—whether it's a parent helping a child get started or a child helping a parent or grandparent with their retirement strategy—it counts as a financial gift. If the amount exceeds the annual exclusion, you'll need to file Form 709 and apply the excess to your lifetime exemption.

Receiving Gifted Funds for an Annuity

If you receive a gift to help fund your own annuity, the gift tax rules apply to the giver, not you. However, you may still want to document the gift in case it raises questions later, especially for larger contributions. Receiving gifted funds to begin your annuity allows the gifter to help you establish a lifetime income stream for retirement, that will grow safely and securely for your future.



We help our clients understand the best way to structure these kinds of gifts—whether that's contributing over time to stay under annual limits or using lifetime exemption strategically.

Gift Tax Triggers to Watch For in 2026

Even with the generous 2026 limits, here are a few scenarios that can unexpectedly trigger a gift tax filing requirement:

• Funding a 529 college savings plan with more than the annual exclusion amount in a single year
• Gifting large amounts for weddings, vacations, or home purchases
• Buying a car or luxury item for someone without compensation
• Paying medical bills or tuition on someone's behalf—but not doing it directly to the provider
• Forgiving a personal loan or giving an interest-free loan
• Adding someone as a joint owner on your bank account

Is the Gift Tax Deductible?

No—gifts to family and friends aren't tax-deductible. Only donations to qualified nonprofits may be deducted from your income taxes.

Final Thoughts

While most people won't ever owe gift tax, many will trigger filing requirements—especially as they share their wealth through larger gifts or estate planning moves. When combined with strategies like annuities or trust planning, gifting can become a powerful tool.

At Summerlin Benefits Consulting, we provide expert guidance to help you protect your retirement income, preserve your wealth, and pass it on wisely. We feel that it's important to be well informed along every step of your retirement planning journey. If you have questions about your current strategies, or would like a no-obligation financial review with one of our licensed professionals, please reach out today.

Summerlin Benefits Consulting is a financial and insurance services firm and does not provide tax, legal, or accounting advice. The information provided is for general informational purposes only and should not be construed as tax advice. We strongly recommend consulting with a qualified tax professional or advisor to assess your individual situation and ensure compliance with applicable tax laws.

Note: This content is for informational purposes only and does not constitute tax or legal advice. Summerlin Benefits Consulting does not provide social security, specific advice related to taxes, or legal advice. Consult a tax/legal professional for guidance with your individual situation.

Frequently Asked Questions

Q: How much can I gift tax-free?

A: The annual gift tax exclusion lets you give up to $19,000 per person in 2026 without filing a gift tax return — married couples can combine for $38,000 per recipient. Amounts above the annual limit count against your lifetime exemption of $15 million in 2026. Most people will never owe actual gift tax.

Q: Do I owe gift tax if I give my child a large amount of money?

A: Most people don’t owe gift tax, even on large gifts. Amounts within the annual exclusion ($19,000 per person in 2026) require no reporting at all. Larger gifts simply reduce your lifetime exemption ($15 million in 2026) — tax is only due if you exceed that lifetime total. Filing Form 709 may be required, but that doesn’t mean you owe tax.



Q: Can I gift money to help someone buy an annuity without paying gift tax?

A: Yes — gifting funds to help someone purchase an annuity follows standard gift tax rules. Amounts within the annual exclusion ($19,000 per person in 2026) require no reporting. Larger contributions apply toward your lifetime exemption. Structuring gifts over multiple years to stay under annual limits is a common strategy — and can help a loved one establish guaranteed retirement income.