Updated: April 14, 2026

It is better to give than to receive. However, giving a gift above a certain monetary threshold can trigger significant tax consequences with the Internal Revenue Service (IRS).

The federal tax code outlines specific rules regarding how much you are allowed to give to others each year, as well as over the course of your lifetime, without tax consequences. Any gifts above that amount may be subject to gift tax, which is paid by the giver. However, not every gift is subject to gift tax. Fortunately, not every financial transfer qualifies as a taxable event. The IRS provides annual exclusion amounts, a lifetime exemption, and specific exclusions for medical and educational expenses. Because the lifetime exemption amount is so large right now, many people won’t have to pay taxes on their gifts. High net worth individuals, on the other hand, should be cautious about how giving may impact their estate tax liability when they die.

Due to recent changes with The Tax Cut and Jobs Act (TCJA) and the One Big Beautiful Bill, understanding these limits is more critical than ever. This article covers the updated 2026 federal exemption limits, what qualifies as a taxable gift, and important state-specific rules for Ohio residents.

WHAT IS CONSIDERED A GIFT UNDER TAX LAW?

According to the IRS, a gift is a transfer of money, property, or other assets, for which the giver does not receive “full consideration.” Consideration is a legal term that means “exchange value.”

Full consideration means fair market value. For example, the fair market value of real estate property is the price that a willing buyer and a willing seller would agree to on the open market. If you sell a $300,000 house to your child for $100,000, the IRS considers the $200,000 difference a gift.

Any exchange lacking full consideration is subject to the gift tax, with the following notable exceptions:

• Tuition and medical costs paid for or by someone else (education exclusion and medical exclusion)
• Gifts to a political organization
• Gifts to your spouse (unlimited gifts can be exchanged between spouses without gift tax implications, assuming both spouses are US citizens)
• Gifts to qualified charities
• Gifts that do not exceed the annual exclusion amount ($19,000 in 2026) to any one recipient in any given year

THE 2026 ANNUAL GIFT TAX EXCLUSION: FEDERAL

As of 2026, the federal annual gift tax exclusion amount is $19,000 per recipient.

This exclusion means you can give up to $19,000 in cash or property to as many individual people as you wish this year without triggering the federal gift tax or needing to file a return. The annual exclusion is calculated per recipient, not per donor.

If you are married, you and your spouse can combine your annual exclusions. This strategy, known as “gift splitting,” allows a married couple to gift up to $38,000 to a single recipient in 2026 without facing tax penalties. You can do this for an unlimited number of recipients, making it an effective strategy for transferring wealth to children and grandchildren over time.

WHAT IS THE LIFETIME EXEMPTION FOR GIFT TAXES?

In addition to the annual gift tax exclusion, there is also a lifetime exemption. The lifetime exemption is the amount you can gift across all tax years before you owe gift taxes. For 2026, the lifetime exemption is $15 million per individual ($30 million for married couples).

Importantly, the lifetime gift tax exemption is tied to the estate tax exemption. The gift tax exemption and the estate tax exemption are effectively treated as a single amount. Thus, over the course of a taxpayer’s life, the amount of non-excluded gifts that they give counts against their lifetime exemption and could also affect their estate tax.

It is unlikely that most individuals will exceed the lifetime gift tax exemption. And even if they do, the tax is graduated (i.e., the tax increases in proportion to the taxable amount).

TAX LAW CHANGES: TCJA AND THE ONE BIG BEAUTIFUL BILL

The Tax Cut and Jobs Act (TCJA) passed in 2017 included significant changes to the tax code. However, its provisions were temporary and set to expire at the end of 2025. With its expiration, the tax laws were set to revert to those from 2017. Now, the One Big Beautiful Bill (OBBB) of 2025, includes legislation to stop most of the tax laws from automatically going back to what they were in 2017, while making some additional changes.

Because of these changes, it may be a good idea to review your gifting strategies and trusts.

The OBBB significantly increased the federal lifetime gift and estate tax exemption to $15 million per individual for 2026 ($30 million for married couples). This legislation effectively prevents the 2026 “sunset” of high exemptions, offering a higher, inflation-adjusted threshold for tax-free wealth transfers.  The high, permanent-style exemption allows for significant lifetime gifting, which moves future appreciation of assets out of the taxable estate.

DOES OHIO HAVE A GIFT TAX?

When planning your estate, you must consider both federal and state laws. A very common question we receive from local clients is: does Ohio have a gift tax?

The answer is no. Ohio does not have a state-level gift tax. You can gift money or property to your family members without worrying about an additional tax levy from the state of Ohio.

Furthermore, Ohio eliminated its state estate tax on January 1, 2013. This means that residents of Ohio only need to plan around the federal gift and estate tax thresholds. While you do not have to worry about Ohio taxing your gifts, you still need to monitor your giving to ensure compliance with the federal IRS limits mentioned above.

KEY FACTS ABOUT FILING AND PAYING GIFT TAX

If you plan to give substantial gifts to family members this year, keep the following procedural points in mind:

• The Donor Pays the Tax: Under IRS rules, the giver (donor) is primarily responsible for paying the gift tax, not the receiver (donee).
• Donee Payment Agreements: The receiver can agree to pay the gift tax instead of the donor. The IRS strongly suggests discussing this arrangement with a tax professional before proceeding.
• IRS Seizures: If a donor owes tax on a gift and fails to pay it, the IRS has the authority to seize the gift and hold the donee responsible for the tax liability. This scenario typically only arises if the donor has passed away.
• Filing Form 709: You do not automatically owe taxes just because you give someone more than $19,000 in a single year. However, you are legally required to file IRS Form 709 (United States Gift Tax Return). This form reports the excess gift to the IRS so they can subtract it from your lifetime exemption. You only pay out-of-pocket gift taxes once your total lifetime giving exceeds the $15 million limit.

For answers to common questions about gift tax issues, see this IRS resource.

GIVE YOURSELF THE GIFT OF A MEETING WITH A TAX-MINDED ATTORNEY

You owe it to yourself to make sure that your gifts are properly accounted for, the right gift tax forms are filed, and that gifting fits into your estate planning goals. An Ohio estate planning attorney can help you understand the tax implications of gifting, including estate tax implications, as well as some of the hidden costs of a gift, including real estate taxes, transfer fees, and capital gains tax.

For guidance regarding gift taxes, estate taxes, and estate planning, contact our office at 614-389-9711 to schedule an appointment.

THERE ARE MANY ESTATE PLANNING TOOLS THAT YOU CAN USE TO PROVIDE FOR YOUR FAMILY. READ ABOUT THEM IN OUR CONSUMER’S GUIDE TO ESTATE PLANNING IN OHIO.

Greg DuPont, JD, CFP®, is a well-respected estate attorney, financial advisor, public speaker, and published author. He has been serving clients as an estate and tax planning attorney since graduating from Capital University Law School in 1992 and added a wealth component to his practice over 15 years ago. He designed his firm to be the place where finance and law meet. He has been named one of Ohio’s Top 100 lawyers and was also recently named an Ohio Super Lawyer. Greg has been featured on WTVN radio and WCMH television. He is a life-long resident of Central Ohio and resides in Hilliard with his wife, Julia, and his daughter, Sophie.