How Much Money Can I Give My Grandchildren Without Triggering Gift Taxes?

Most households don’t have to worry about the gift tax.

For 2025, you can give up to $19,000, per person, to as many people as you want without triggering any taxes. This is the annual exemption. Beyond this amount, you can give away up to $13.99 million in total over your lifetime without paying taxes as of 2025. This is the lifetime exemption. Once you’ve given away your entire lifetime exemption then, each year, you’ll be taxed on the amount you give away above the annual exemption.

As a result, the exact amount you can gift tax-free each year depends on how many people you are giving money to, how much you have gifted in the past, and other factors. For example, say that you are a grandparent with several grandchildren. How much money can you give them without triggering gift taxes? For help with your particular situation, you can always consider reaching out to a financial advisor.

What Is the Gift Tax?

The gift tax is a tax on all unilateral transfers and all significantly below-value exchanges. Together, these are both considered gifts.

A unilateral transfer occurs when you give someone assets or money without receiving anything in return. This is the standard concept of a gift. A below-value exchange occurs when you sell someone an asset in exchange for much less than it’s worth. For example, say that you own a house valued at $500,000, but you sell it to your grandchildren for $100. That would count as a gift in the amount of $499,900 (the difference in value).

When you give someone a gift, the IRS taxes it based on the total value of what you gave. Like the related estate tax, the gift tax is paid by the giver, not the recipient. In order to report taxable gifts, you would file Form 709 with your annual taxes. The gift tax brackets range from 18% for gifts up to $10,000, up to 40% for gifts over $1 million in value. However, very few households ever pay the gift tax. This is because the tax comes with very high exemptions.

Gift Tax Exemptions

The gift tax comes with two exemptions: an annual exemption and a lifetime exemption. Gifts that fall under your annual exemption are not reportable, meaning that you don’t even have to mention them on your tax returns. This is why, for example, buying someone dinner or giving them $20 is not considered a taxable event.

When you give someone a gift above the annual exemption, you report the value of the gift in your taxes on Form 709. Any giving above your annual exemption reduces your lifetime exemption, but is again not necessarily taxable. Any giving above your annual exemption and above your remaining lifetime exemption is taxable.

The annual exemption in 2025 is $19,000. This is the amount that you can give away each year per recipient without reporting it on your taxes. It refreshes annually, meaning that you can give away up to the annual exemption one year, then do so again the following year. Because it applies on a per-recipient basis, you can give away $19,000 each to as many different people as you want.

For example, say that you have three grandchildren: Sam, Alex and Pat. In 2025, you could give $19,000 each to Sam, Alex and Pat, for a total of $57,000. Then, in 2026, you can give them $19,000 each again (assuming the annual exemption amount remains constant).

The lifetime exemption is $13.99 million as of 2025. This is the amount that you can give away over your entire life without paying taxes. It only applies to reportable gifts, meaning any gifts above the annual exemption. It applies collectively to all gifts that you give to all recipients over your lifetime. Every time you make a reportable gift, it reduces your lifetime exemption. When your exemption is used up entirely, all additional giving is taxable.

For example, say that you’ve given away $13 million in various gifts to various people over the course of your life. This year, you give $400,000 each to Sam, Alex and Pat. First, each gift has a $19,000 annual exclusion that applies to each recipient. This would leave you with $381,000 in reportable gifts to each recipient. This is $1.143 million in reportable giving. You have $990,000 left to your lifetime exemption. This would give you $153,000 in taxable giving ($1,143,000 – $990,000).

Each year the IRS adjusts these numbers to reflect inflation. The side effect of that adjustment is that households get additional money they can give under the lifetime exemption each year. For example, say that you have given away $13.99 million over the course of your life by the end of 2025. Then, in 2026, the lifetime exemption is increased to $14.27 million. You will be able to gift another $280,000 tax-free before you reach the new cap.

There is a chance the lifetime exemption will drop in half at the end of 2025. This exemption was doubled under the 2017 Tax Cuts and Jobs Act. Several elements of the personal income tax reductions in this law are scheduled to expire at the end of 2025. This is unlikely, as the current Republican majority in Congress and the White House has suggested extending the tax cut. However, if this law does expire, then wealthy households will have their untaxed giving opportunities halved beginning in 2026.

A financial advisor can help you keep track of important legislative changes that may impact your financial plan.

Specific Circumstances: Gift Splitting, Married Recipients and Generation-Skipping

All gift tax limits apply on a per-person basis. This means that married households can potentially give or receive twice as much money.

When each person in a married couple give a gift, this is referred to as gift-splitting. This allows each married person to apply their exemptions. So, if you give a gift as a married couple, your annual exemption is up to $38,000 per year if you opt to split the gift (which always requires you file Form 709, regardless of the amount given). Then, above that amount, your lifetime exemption is up to $27.98 million.

Finally, there is the Generation Skipping Tax (GST). This is a specific tax that applies to any transfers for the benefit of any recipient 37.5 years younger than the giver. This can apply to a Direct Skip, meaning any gift given directly to the younger recipient, or an Indirect Skip, meaning any gift given to a trust or third party for the eventual benefit of the younger person.

The GST does not change any exemption amounts, so it only applies to gifts above the annual and lifetime exemptions. However, above this limit, all gifts are automatically taxed at the maximum 40% gift tax bracket. This tax does not affect how much you can give without paying taxes, it just adjusts how high your taxes are when you pay them.

Consider speaking to a vetted financial advisor if you have questions about the nuances of gift-giving laws.

How Much Can You Give Your Grandchildren?

This brings us to our hypothetical. You would like to give money to your grandchildren. How much can you give them without paying taxes? This will depend on a number of factors:

Are you married or single?
How many grandchildren do you have?
How many of them have spouses?
What is your current lifetime exemption?
Over how many years would you like to make gifts?

The short answer to your question is this: The maximum amount that you can give to your grandchildren is $19,000 per person per year, plus $13.99 million assuming you have not used any of your lifetime exemption. The maximum amount that you and a spouse may be able give to each grandchild is $38,000 per person per year, plus $27.98 million. For a married grandchild where you and your spouse are gift-splitting, you would be able to give the couple up to $76,000 in one year plus the $27.98 million lifetime exemption.

Remember, the amount that you can give to your family may depend on their relationship to you, and the exemption amounts may change frequently so it’s important to plan ahead for larger gifts. You can use this free tool to match with fiduciary financial advisors if you’re interested in professional guidance.

Bottom Line

The gift tax is a tax on unilateral transfers and significantly below-value transfers. You can give away up to the annual exemption without reporting it on your taxes, and you can give away up to the lifetime exemption without paying taxes at all.

Tips On Maximizing Your Gift Tax

If you do end up needing to give away a lot of money and assets, it might be time to strategize how to manage your gift taxes.
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