You Can Give $20,000 Tax-Free in 2027 — IRS Confirms

The IRS has confirmed it: in 2027, you can give up to $20,000 to each person you choose — tax-free, no paperwork, no lifetime exemption used. That is the 2027 gift tax annual exclusion, up from $19,000 in 2026, and it was announced in Revenue Procedure 2026-35 on November 5, 2026 (IRS news release IR-2026-133). If you help your kids with a down payment, fund a grandchild’s college account, or hand cash to family at the holidays, this number decides how much you can move without a single form.

The headline number is simple. The planning around it is where people slip up — especially in December, when one wrong week can cost you a full year of exclusion.

What the 2027 gift tax annual exclusion actually is

The annual exclusion is the amount the IRS lets you give to any one person each year without the gift counting against your lifetime gift and estate tax exemption, and without you owing gift tax or filing a gift tax return. In 2027 that amount is $20,000 per recipient. Give $20,000 or less to your daughter, and the IRS does not care — no form, no tax, no record against your lifetime exemption. Give $20,001, and the extra $1 counts against your lifetime exemption and triggers a filing requirement.

Two features make this more powerful than it looks at first glance. First, the exclusion is per recipient, not per giver. You do not get one $20,000 bucket for the whole family; you get $20,000 for every single person you give to. Second, it resets every January 1. What you gave in 2026 has no effect on what you can give in 2027 — each year’s exclusion stands on its own.

The exclusion only moves in $1,000 increments, adjusted for inflation using the Consumer Price Index. That is why it sat at $19,000 for 2026 and steps to $20,000 for 2027: cumulative inflation pushed it over the next $1,000 threshold. It will not creep to $20,500 — it jumps a full thousand at a time, and only when inflation justifies it.

2026 vs 2027: the full comparison table

Here is every number that changed, in one place. These are the figures from Revenue Procedure 2026-35, the IRS’s annual inflation-adjustment release.

A few things in that table deserve a second look. The lifetime exemption rose by $480,000 per person, and the GST exemption — which covers gifts that skip a generation, say straight to a grandchild — matches the lifetime exemption at $15,480,000. The noncitizen-spouse exclusion, a special rule for spouses who are not U.S. citizens, is confirmed at $201,000 for 2027.

One more timing point that trips people up: the 2027 figures apply to tax year 2027, which means gifts made during calendar year 2027 and reported on returns filed in 2028. Gifts you make before December 31, 2026 are still governed by the 2026 figures — the $19,000 exclusion, not the $20,000 one. The calendar, not the announcement date, controls which number applies.

How the $20,000 exclusion works in real life

It is per recipient, so the total adds up fast

The most common mistake I see people make with the gift tax is thinking of the exclusion as a single household allowance. It is not. You can give $20,000 to your son, $20,000 to your daughter, $20,000 to each grandchild, and $20,000 to a friend — and every one of those gifts is fully covered. There is no cap on how many people you can give to, and no total annual limit on excluded gifts.

Run the math on an ordinary extended family and the numbers get serious. A parent with three adult children and five grandchildren has eight recipients. At $20,000 each, that is $160,000 a year moving out of their estate with zero tax and zero paperwork. Over five years, that is $800,000 — and the exclusion will likely tick higher in later years as inflation continues.

Gift splitting: a married couple can give $40,000 per recipient

If you are married, the numbers double. Under gift splitting, a married couple can treat a gift made by one spouse as if it were made half by each spouse. The practical result: a couple can give $40,000 per recipient in 2027 without touching their lifetime exemption or filing anything — $20,000 from each spouse’s exclusion, combined.

Gift splitting is automatic in the sense that you do not need a special election to use it for gifts within the combined exclusion. It only starts requiring paperwork when the combined gift to one person exceeds $40,000 — then Form 709 comes into play, and the spouse who did not actually make the gift must consent to the split on the return. For ordinary within-the-limit gifts, though, a couple simply gives and moves on.

Note the symmetry with the lifetime exemption too: with portability, a married couple’s combined basic exclusion amount in 2027 is $30,960,000 — $15,480,000 each.

The December-vs-January trap: the worksheet

Here is the trap, and it catches smart people every year. The 2026 and 2027 exclusions are separate, and the unused 2026 exclusion does not roll into 2027. If you give $19,000 to your son on December 30, 2026, you have used your 2026 exclusion for him. If you then give him another $20,000 on January 2, 2027, that is a fresh gift under the fresh 2027 exclusion — fully covered. But if you give him $0 in 2026 and $20,000 in January 2027, you have not “banked” the unused 2026 amount. You cannot give him $39,000 in January and call $19,000 of it a 2026 gift. It does not work that way.

What that means in practice is that December is a use-it-or-lose-it month for the current year’s exclusion — and January is a brand-new start. A gift made by December 31, 2026 uses the $19,000 exclusion. A gift made in January 2027 uses the $20,000 exclusion. The calendar date on the check, the wire, or the transfer is what counts, not when you decided to give it.

Worked example: a couple giving to 2 children and 4 grandchildren

Let us make this concrete. Take a married couple — call them Maria and Tom — who want to help their two adult children and four grandchildren. Six recipients in total.

December 2026 gift (2026 exclusion, $19,000 per person per spouse):

• Per recipient: $19,000 × 2 spouses = $38,000
• Six recipients × $38,000 = $228,000 total, fully excluded
• Tax owed: $0. Forms to file: none. Lifetime exemption used: $0.

January 2027 gift (2027 exclusion, $20,000 per person per spouse):

• Per recipient: $20,000 × 2 spouses = $40,000
• Six recipients × $40,000 = $240,000 total, fully excluded
• Tax owed: $0. Forms to file: none. Lifetime exemption used: $0.

Combined across the year-end boundary: $468,000 moved to six family members in the space of a few weeks, with no tax and no forms — simply because the couple made one round of gifts in December and another in January instead of lumping everything into a single month.

Now compare the mistake version. Suppose Maria and Tom skip December entirely and give the whole amount in January 2027 — say $78,000 to each recipient ($468,000 ÷ 6). The first $40,000 per recipient is covered by the 2027 exclusion. The remaining $38,000 per recipient — $228,000 total — exceeds the annual exclusion. That excess counts against their lifetime exemption and requires a Form 709 gift tax return. No tax would actually be owed (their lifetime exemption is nearly $31 million combined), but they have now spent $228,000 of that exemption and filed a return they never needed to file — all because they waited a few weeks.

The lesson is not that you must give in December. It is that splitting a large gift across the year-end boundary is free money in tax terms, and the only cost is remembering to do it before December 31.

A quick worksheet for your own family

Grab a piece of paper or a spreadsheet and fill this in:

1. List your recipients. Every person you plan to give to in the next few months.
2. December column. For each recipient, write $19,000 (or $38,000 as a couple using gift splitting). That is your 2026 cap per person.
3. January column. For each recipient, write $20,000 (or $40,000 as a couple). That is your 2027 cap per person.
4. Add the columns. The December total is what you can still give tax-free before the year ends. The January total is what opens up on New Year’s Day.
5. Compare with your plan. If your planned gift to any one person exceeds the column for that month, either split it across the two months or accept that the excess will use lifetime exemption and require Form 709.

One practical note on timing: a check mailed in December but not cashed until January can create a dispute about which year the gift belongs to. If you are cutting it close to December 31, use a wire transfer or an electronic transfer with a clear timestamp, and keep the confirmation.

What counts as a gift — and what does not

Not every dollar you hand a family member is a “gift” for tax purposes, and knowing the difference saves real money.

Counts toward the exclusion: cash, checks, wire transfers, stocks, real estate interests, forgiving a loan you made to a family member, and paying someone else’s expenses on their behalf (with exceptions below).

Does not count at all — unlimited, no exclusion used: tuition paid directly to a school or university for someone, and medical expenses paid directly to the provider. If you pay your granddaughter’s $35,000 college tuition straight to the university, that is not a gift for tax purposes. It does not touch your $20,000 exclusion, and you can still give her $20,000 on top of it. The key is paying the institution directly — reimbursing her after she pays does not get the same treatment.

The tuition and medical exceptions are worth remembering on their own, because they stack with the annual exclusion. A grandparent who pays $30,000 in tuition directly to a college and gives $20,000 in cash to the same grandchild in the same year has moved $50,000 to that grandchild with zero gift tax consequences.

Form 709: when you have to file

Form 709 is the United States Gift (and Generation-Skipping Transfer) Tax Return. The name sounds scarier than the reality for most families. Here is the rule in plain language: you file Form 709 when you give any one person more than the annual exclusion in a calendar year. In 2027, that threshold is $20,000 per recipient ($40,000 for a couple using gift splitting).

Filing Form 709 does not mean you owe tax. For the overwhelming majority of people, the amount above the exclusion simply counts against the $15,480,000 lifetime exemption, and no tax is due until that exemption is exhausted. The return is how the IRS keeps track of how much of your lifetime exemption you have used. Think of it as a ledger entry, not a bill.

What triggers Form 709 in 2027

• You give one person more than $20,000 in 2027 (or more than $40,000 as a couple with gift splitting).
• You make a gift of a future interest — for example, putting money in a trust where the recipient cannot access it right away. Future-interest gifts do not qualify for the annual exclusion at all, even if the amount is small.
• You elect gift splitting with your spouse for a gift that exceeds the combined exclusion, or you make a gift to a noncitizen spouse above the $201,000 threshold.
• You make a generation-skipping transfer, such as a gift directly to a grandchild that exceeds the exclusion.

What does not trigger Form 709

• Any gift within the annual exclusion — $20,000 or less per recipient in 2027.
• Tuition or medical expenses paid directly to the institution or provider.
• Gifts to a U.S.-citizen spouse, or gifts to charity.

If you do need to file, the return is filed for the tax year in which the gift was made — a 2027 gift is reported on the return for 2027, filed in 2028 alongside your regular tax season. Check the current IRS instructions for Form 709 for the exact due date and extension rules. And if the numbers get complicated — trusts, business interests, gifts of property that needs an appraisal — that is the moment to talk to a CPA or estate attorney rather than guessing.

The $15.48 million lifetime exemption — and the law that made it permanent

For years, the big question hanging over estate planning was the scheduled “sunset.” Under the 2017 tax law, the lifetime exemption was set to drop roughly in half — to around $7 million per person — at the end of 2025. Families with estates in the $8–15 million range spent years planning around a cliff that might or might not arrive.

It did not arrive. The One Big Beautiful Bill Act (OBBBA), signed in July 2025 as Public Law 119-21, made the roughly $15 million exemption permanent and indexed it to inflation. That is why the 2027 figure is $15,480,000 instead of a cliff-edge $7 million: the permanent base of $15 million for 2026, adjusted upward for inflation. The GST exemption follows the same path at $15,480,000.

For most readers, the practical effect is simple: only estates above $15.48 million per person ($30.96 million per couple) face federal estate or gift tax at all. But the annual exclusion still matters for everyone, because it moves money out of your estate year after year without ever touching that exemption — and going over it, even by a dollar, creates the Form 709 filing duty. One caution: “permanent” in tax law means “until Congress changes it again,” so treat the lifetime exemption as generous but not untouchable.

Gifts to a noncitizen spouse: the $201,000 rule

Most married couples never think about this, but it matters for mixed-citizenship families. Gifts between spouses are normally unlimited when both are U.S. citizens — the marital deduction covers everything. When the receiving spouse is not a U.S. citizen, the unlimited deduction does not apply, because Congress worried the noncitizen spouse could take the assets out of the U.S. tax system.

Instead, gifts to a noncitizen spouse get their own, much larger annual exclusion: $201,000 in 2027. That is a separate number from the regular $20,000 exclusion — it applies only to gifts to a noncitizen spouse, and it is per year, just like the regular exclusion. Give your noncitizen spouse $201,000 or less in 2027 and no gift tax return is needed on that transfer. Go above it, and the excess counts against your lifetime exemption and requires Form 709.

If this situation applies to your family, it is worth a conversation with a CPA who handles cross-border issues, because the noncitizen-spouse rules interact with estate tax portability and with the tax treatment of the spouse’s home country. But the headline number — $201,000 for 2027 — is the one to remember.

Practical moves before December 31, 2026

The 2027 numbers are confirmed, which means the next six weeks are the window to act on the 2026 numbers before they expire. A short checklist:

1. Check what you have already given in 2026. Add up gifts to each recipient this year. If anyone is under $19,000, you still have room before December 31.
2. Decide whether to top up. If you planned to give a child $20,000 in January, consider giving $19,000 in December and $20,000 in January instead. Same total generosity, zero forms.
3. Use direct-pay for tuition and medical bills. If a grandchild has a spring tuition bill, paying the school directly does not use your exclusion at all — and it stacks with a cash gift.
4. Mind the transfer method. Wire or electronic transfer with a dated confirmation is the cleanest proof of a December gift. A check mailed December 30 and cashed January 5 invites questions.
5. Coordinate with your spouse. If you are gift splitting, agree on the amounts together — the combined $38,000 (2026) and $40,000 (2027) per-recipient caps only work when both spouses’ gifts are counted.
6. Write it down. Keep a simple note: recipient, date, amount, method. If the IRS ever asks, a one-page record ends the conversation.

Where to verify the numbers

The figures in this article come from the IRS’s own announcement. Revenue Procedure 2026-35, released November 5, 2026 with news release IR-2026-133, sets the 2027 annual exclusion at $20,000, the basic exclusion amount at $15,480,000, and the noncitizen-spouse exclusion at $201,000. Two useful breakdowns of the 2027 figures:

• IRS issues 2027 inflationary adjustments — Shumaker client alert
• Gift tax exclusion 2027 — year-over-year breakdown

For the wider 2027 tax picture — brackets, standard deduction, and how the same inflation adjustments affect business owners — see our IRS 2027 tax brackets and standard deduction guide for business owners. And if you are racing a different December 31 deadline, the 529-to-Roth IRA rollover deadline guide covers another year-end cutoff that expires the same day.

This article is for general information only and is not professional tax advice. Tax rules change, and your situation may involve details not covered here. Check the current IRS terms or talk to a CPA or estate attorney before making large gifts.

Frequently Asked Questions

How much can I give tax-free in 2027?

$20,000 per recipient. That is the IRS’s 2027 gift tax annual exclusion, confirmed in Revenue Procedure 2026-35. You can give that amount to as many people as you like, and none of it counts against your lifetime exemption or requires a tax return. A married couple using gift splitting can give $40,000 per recipient.

Is the 2027 gift tax exclusion really $20,000?

Yes. The IRS announced it on November 5, 2026, in Revenue Procedure 2026-35 (news release IR-2026-133). It is up from $19,000 in 2026 because the exclusion adjusts for inflation in $1,000 increments. The $20,000 figure applies to gifts made during calendar year 2027.

Do I have to file a tax return if I give someone $20,000 in 2027?

No. Gifts within the annual exclusion require no return at all. You only file Form 709 — the gift tax return — if you give one person more than $20,000 in 2027 (or more than $40,000 as a couple with gift splitting), or if you make certain special gifts such as future-interest transfers. Filing Form 709 usually does not mean tax is owed; the excess normally counts against your $15,480,000 lifetime exemption.

Can I give $19,000 in December 2026 and $20,000 in January 2027 to the same person?

Yes, and that is exactly how the rules are designed to work. The 2026 exclusion ($19,000) and the 2027 exclusion ($20,000) are separate. A December gift uses the 2026 exclusion; a January gift uses the fresh 2027 exclusion. What you cannot do is skip 2026 and carry the unused $19,000 into 2027 — unused exclusion does not roll over.

What is the lifetime gift and estate tax exemption for 2027?

$15,480,000 per person, up from $15,000,000 in 2026. A married couple with portability has a combined $30,960,000. The One Big Beautiful Bill Act (July 2025) made the roughly $15 million exemption permanent and indexed to inflation, so the scheduled drop to about $7 million did not happen. The generation-skipping transfer exemption is also $15,480,000 in 2027.

Does paying my grandchild’s tuition count against the $20,000 exclusion?

No — as long as you pay the school directly. Tuition paid straight to an educational institution, and medical expenses paid straight to the provider, are not treated as gifts at all. They do not use any of your annual exclusion, so you can pay the tuition and still give the same person a full $20,000 cash gift in the same year. Reimbursing the student after they pay does not get the same treatment.