Gift Tax Calculator

Ask most people what happens if they give a child more than the annual exclusion and they will say they owe gift tax. They do not. They owe a form.

Gifts above the annual exclusion — $19,000 per recipient for 2026 — are reported on Form 709 and consume lifetime exemption. That exemption is $15,000,000 for 2026, and it is unified: the same pot covers gifts made during life and the estate at death. Actual gift tax is payable only once cumulative taxable gifts have exhausted the whole $15,000,000, which happens to a very small number of people.

So the practical question for almost everyone is not "how much tax" but "how much exemption am I using, and do I care". For an estate that will never approach $15,000,000, using exemption costs nothing at all. For one that might, every dollar of exemption spent on a lifetime gift is a dollar unavailable at death — though the appreciation on that gift after it leaves your hands is out of your estate for good, which is the entire point of giving early.

The annual exclusion is per recipient per year, and that structure is more generous than it first appears. A married couple with three children and three children-in-law can move $228,000 a year with gift splitting, indefinitely, without touching lifetime exemption or filing anything if they give directly.

Gift splitting doubles the exclusion by treating each gift as made half by each spouse, but it is an election rather than a default. Both spouses must consent on Form 709, and consenting applies to every gift either of them makes that year.

The most underused provision is section 2503(e). Tuition paid directly to an educational institution, and medical expenses paid directly to a provider, are excluded entirely — no limit, no exemption used, nothing to report. A grandparent can pay a full private school or university bill on top of the annual exclusion. The word doing the work is "directly": the payment must go to the school or hospital. Handing the money to the parent to pay the bill is an ordinary gift and counts against the exclusion.

The exclusion is per calendar year, so a gift on 31 December and another on 1 January use two years of exclusion. That single fact does more work in practice than any sophisticated planning.

A gift to a US citizen spouse is unlimited under the marital deduction. A gift to a non-citizen spouse is not, and instead has its own annual limit — $194,000 for 2026. Couples where one spouse has not naturalised are frequently unaware of this, and joint accounts can create gifts without anyone intending one.

Appreciated property carries a further wrinkle. A gift transfers your cost basis to the recipient, so they inherit the built-in gain. Assets left at death generally receive a stepped-up basis instead. Giving a low-basis stock away during life can therefore save estate tax while creating an income tax liability that dying with it would have erased — the right answer depends on whether the estate is genuinely likely to be taxable.

Finally, the $15,000,000 exemption is a current figure, not a permanent one. Exemption levels have moved substantially with legislation more than once, and planning that assumes today's number will still be there is planning on an assumption rather than a fact.