In most instances, giving each of your children $50,000 won’t cause you to owe any taxes, but some specifics apply to this assumption. The exception would be if all the gifts you give over your lifetime come to more than the lifetime exclusion amount, which is set at $13.61 million for 2024. Even then, you won’t owe any taxes until you exceed that amount of lifetime gifts. So while a gift of $50,000 to an individual does exceed the annual gift exclusion amount of $18,000 for 2024, you will only have to report the amount of the gift in excess of the exclusion amount on your taxes. In other words, you still won’t actually have to pay any taxes unless and until you have given more than the lifetime exclusion amount.
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Gift Tax Basics
The federal gift tax applies to any payments you make without getting something of comparable value in return. Taxable gifts can consist of cash, stocks, real estate or other assets. The gift tax is typically paid by the giver, although the recipient can agree to pay the tax under special circumstances.
There are two exclusion rules to be aware of. One excludes from taxation any gift amounting up to $18,000 to any individual for 2024. That means you don’t have to pay taxes or even report the gift as long as the amount is less than $18,000 in 2024. The annual exclusion applies to gifts on a per individual basis, so you can give $18,000 to as many people as you want and it won’t accumulate.
The much larger 2024 lifetime exclusion is set at $13.61 million. To see if you exceed the lifetime exclusion, total all the gifts you’ve reported to the IRS that exceed the annual exclusion amounts over your entire life. Only the amount of these gifts in excess of the $13.61 million exclusion amount is subject to taxation. Unlike the annual gift exclusion, the lifetime gift exclusion (which is also the estate tax exemption) applies to all the gifts you give, not just those to one person.
Because of these generous exclusion amounts, few people actually pay gift taxes. There are also exclusions for gifts in any amount to a spouse or dependent such as a minor child. Funds paid directly to an educational institution or for medical care or health insurance are also not counted as taxable gifts.
If you make a gift to someone that is over the annual exclusion amount, you must file Form 709 to report the gift to the IRS. If you’ve split the gift as a couple, you have to file Form 709 even if each gift did not exceed the exclusion amount.
Gift Tax Rates
When gift taxes are due, they are applied progressively. The larger the gift, the higher the tax rate. Here are the current federal marginal gift tax rate brackets:
| Taxable Gift Bracket | Tax Rate |
| Up to $10,000 | 18% |
| $10,000 to $20,000 | 20% |
| $20,000 to $40,000 | 22% |
| $40,000 to $60,000 | 24% |
| $60,000 to $80,000 | 26% |
| $80,000 to $100,000 | 28% |
| $100,000 to $150,000 | 30% |
| $150,000 to $250,000 | 32% |
| $250,000 to $500,000 | 34% |
| $500,000 to $750,000 | 37% |
| $750,000 to $1,000,000 | 39% |
| More than $1,000,000 | 40% |
Note that the tax rate is applied only to amounts in excess of the annual exclusion, which again is currently $18,000. Assuming you’ve already given away enough to be in excess of the $13.61 million lifetime exclusion amount, a $50,000 gift would be taxed as follows according to the brackets/rates above:
| Amount Subject to Tax | Tax Rate Applied | Taxes Owed |
| First $18,000 | No tax | $0 |
| Next $10,000 | 18% | $1,800 |
| Next $10,000 | 20% | $2,000 |
| Last $12,000 | 22% | $2,640 |
In this case, the total tax on each $50,000 gift would be $6,440 ($1,800 + $2,000 + $2,640). Again, unless you have given more than $13.61 million in your lifetime, you won’t owe any gift taxes at all.
One item to be aware of is that the $13.61 million exclusion is only for 2024. The lifetime and annual amounts are adjusted annually to keep pace with inflation. In 2023, for example, the lifetime exclusion was $12.92 million and the annual exclusion was $17,000. The lifetime exclusion was increased by a much larger amount in 2018 and is set to decline in 2026 unless Congress chooses to extend the increase.
These rules apply to the federal gift tax. Among states, only Connecticut has a gift tax, so the federal gift tax is the only one applicable to most taxpayers.
Strategies for Managing Gift Taxes
Even if you’ve exceeded the lifetime exclusion amount of $13.61 million, you may still be able to avoid paying taxes on $50,000 gifts to your children. One way is to spread the gifts over three or more years. As long as you don’t exceed the annual gift exclusion amount, you don’t have to report or pay taxes on gifts. Using the 2024 amount (which could raise or lower in future years), you could give $18,000 this year, $18,000 next year and $14,000 the following year for a total of $50,000 without exceeding an individual year’s annual exclusion.
Also, married couples can give separate gifts, letting them give twice as much to any individual before reaching the exclusion amount. In turn, you and your spouse can each give $18,000 to each child each year, for a total of $36,000 annually, without crossing the reporting or tax threshold. This would still subject $14,000 to taxes, unless you spread the gift over two years.
You can also avoid gift taxes if, rather than giving the money directly to your child, you pay it to an educational institution. The same is true if the money goes to a health insurance provider or for medical care.
Bottom Line
The exclusions to the federal gift tax mean you can probably give $50,000 to each of your children without owing any tax. Since a gift of that size is more than the current annual exclusion of $18,000, you would have to file Form 709 to report the gift to the IRS. However, unless your total lifetime gifts are more than the lifetime exclusion amount, currently set at $13.61 million, you won’t have to pay any taxes on these gifts.
Financial Gifting Tips
- A financial advisor can help you structure your gifting plans to avoid or minimize taxes. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Use SmartAsset’s income tax calculator to project your future tax refund or liability.
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