Blog · 14 October 2026

2026 Gift Tax Annual Exclusion: $19,000 per Donee, Gift-Splitting and Form 709 — What US CPA Firms Should Tell Clients

By Keshav Bansal, CA

The 2026 gift tax annual exclusion is $19,000 per donee. Rev. Proc. 2025-32 (section 4.42) provides that for calendar year 2026 the first $19,000 of gifts to any person, other than gifts of future interests, is not included in taxable gifts under §2503. The IRS gift-tax FAQs (updated December 2025) list the same $19,000 for 2025 and 2026. Year-end is when clients ask whether a holiday check, a tuition bill or a $38,000 transfer to a child needs a Form 709. This guide covers the gift tax annual exclusion rules US CPA firms should confirm before December 31.

The 2026 numbers, from primary sources

• Annual exclusion: $19,000 per donee for 2026 present-interest gifts (Rev. Proc. 2025-32 §4.42(1); IRS gift-tax FAQs).
• Noncitizen spouse: $194,000 for 2026 (Rev. Proc. 2025-32 §4.42(2)), up from $190,000 for 2025 per the 2025 Form 709 instructions.
• Basic exclusion amount: $15,000,000 for 2026. Rev. Proc. 2025-32 §3.14 says section 70106 of P.L. 119-21 (July 4, 2025) amends §2010(c)(3) to set it. The 2026 GST exemption is also $15,000,000, with inflation adjustment from 2027.
• Top rate: 40% for gifts and generation-skipping transfers (Form 709 instructions).

Citation correction: 24/7 Wall St. (October 9, 2026) attributed the $19,000 cap to “Rev. Proc. 2026-25.” The IRS source that sets the 2026 amount is Rev. Proc. 2025-32. Use that citation in workpapers.

Married couples: $38,000 two different ways

Each spouse has a separate $19,000 exclusion for every donee. The IRS FAQ table shows $38,000 per donee “from 2 spouses” for 2026. Whether a return is needed depends on how the money moves.

• Separate gifts from each spouse’s own funds. If each spouse gives a donee $19,000 or less of present interests, the 2025 Form 709 instructions’ “who does not need to file” test generally means no return for those gifts.
• One spouse writes the whole check. To treat a $38,000 gift from one spouse as $19,000 from each, the couple must elect gift-splitting under §2513. The instructions say a return is required to split gifts “regardless of their amount.”

Gift-splitting has strings attached. Consent covers the whole calendar year, so all gifts either spouse made to third parties while married must be split, and liability becomes joint and several. The consenting spouse signs a Notice of Consent attached to the donor spouse’s return. Under Exception 1, only the donor spouse files if only one spouse made gifts, no donee received more than $38,000 and all gifts were present interests.

Hypothetical arithmetic (not from any IRS source): a couple with three children who each give each child $19,000 from separate accounts moves 3 × $38,000 = $114,000 in 2026 within the exclusions. If one spouse writes all three $38,000 checks instead, the same result needs a gift-splitting election on Form 709.

Use it or lose it: no carryover, and watch the check date

Section 2503(b) excludes the first $19,000 of gifts made to a person “during the calendar year.” Nothing carries forward, so an unused 2026 exclusion is simply lost.

Check timing matters too. Under Rev. Rul. 96-56, a check to a noncharitable donee counts as a completed gift when the donee deposits, cashes or presents it, but several conditions apply. The bank must pay the check when first presented, the donor must be alive at payment, and delivery must be unconditional. The check must also be presented in the year for which gift treatment is sought and within a reasonable time. A check handed over on December 30 and deposited in January is a 2027 gift.

Section 2503(e): tuition and medical paid directly sit outside the cap

Under §2503(e), a “qualified transfer” is not treated as a gift at all. That means tuition paid to an educational organization described in §170(b)(1)(A)(ii), or payment to a provider of medical care (as defined in §213(d)), on behalf of an individual. Per the Form 709 instructions:

• Pay the school or provider directly. Money given to the student or patient is an ordinary gift.
• Only tuition qualifies. Books, supplies, room and board are gifts to the individual, which the annual exclusion may still cover.
• Medical insurance paid on someone’s behalf counts as medical care. Amounts reimbursed by the donee’s insurance do not qualify.
• 529 plan contributions do not qualify. The five-year 529 election is a separate Schedule A, line B item.
• Qualifying transfers are not listed on Schedule A, and the donor’s relationship to the donee does not matter.

Lifetime exemption, Form 709 and the income-tax side

Going over $19,000 to one donee rarely means paying tax. The excess is a taxable gift reported on Form 709 and absorbed by the donor’s applicable exclusion ($15,000,000 basic exclusion for 2026). Gift tax is generally owed only after that is used up. Form 709 is due April 15 of the following year. An income tax extension extends it automatically; otherwise use Form 8892. Neither extends the time to pay. The IRS FAQs note that Form 709 can now be e-filed.

Per the IRS FAQs, donors cannot deduct gifts unless they are deductible charitable contributions, and a recipient who sells gifted property generally takes the donor’s basis. Under §102(a), gifts are excluded from the recipient’s income. For clients giving to charity instead, see charitable contribution substantiation after Williams and qualified charitable distributions and Code Y.

What US CPA firms should tell clients before December 31

• Total gifts by donee. Include birthday cash, forgiven family-loan principal, 529 contributions and gifts in trust. For loans, see AFR rates October 2026 and below-market family loans.
• Confirm present interest. Future interests get no annual exclusion and must be reported regardless of amount.
• Decide who signs. Separate accounts avoid a gift-splitting return. A single check from one spouse means a Form 709 election and consent for the whole year.
• Pay tuition and medical directly and keep the invoices.
• Deliver checks early enough to be deposited in 2026.
• Count new child accounts. Include contributions to accounts such as Trump accounts under §530A in the same per-donee tally.

Where this fits for Tax Brew readers

Most annual-exclusion work is data gathering: who gave what, to whom, from which account, and when the check cleared. If gift logs or draft Forms 709 are stretching your team, outsourced tax prep and bookkeeping support for US CPA firms can assemble the schedules while your signing professionals make the judgment calls. Email info@taxbrewglobal.com.

Check current IRS guidance: this article summarizes Rev. Proc. 2025-32 (§§3.14, 4.42), the IRS “Frequently asked questions on gift taxes” (tables updated December 2025), the Instructions for Form 709 (2025), IRC §§2503(b), 2503(e), 2513 and 102(a), and Rev. Rul. 96-56 (IRB 1996-50), with framing from 24/7 Wall St. (October 9, 2026). The 2026 Form 709 instructions may change details. This is general information, not tax or legal advice. Sources as of 14 October 2026.