2017 Gift Tax Exclusion
For 2017, the Gift Tax Exclusion figures are $14,000 (Annual exclusion per recipient) and $149,000 (Annual exclusion for a gift to a noncitizen spouse).
Effective 2017-01-01Source: Rev. Proc. 2016-55 (IRS)Verified 2026-09-03
Compared with 2016
| Item | 2016 | 2017 | Change |
|---|---|---|---|
| Annual exclusion per recipient | $14,000 | $14,000 | +$0 (+0.0%) |
| Annual exclusion for a gift to a noncitizen spouse | $148,000 | $149,000 | +$1,000 (+0.7%) |
Who it applies to
Taxpayers who make gifts to individuals during calendar year 2017
What changed this year, and why
For 2017, the annual gift tax exclusion is $14,000 per recipient. A donor may give up to $14,000 to any one person during calendar year 2017 without the gift counting against the donor's lifetime gift and estate tax exemption. The exclusion covers present-interest gifts only; gifts of future interests in property do not qualify. The exclusion applies separately to each recipient, so a donor who gives $14,000 or less to each of several people owes no gift tax on those transfers. A different, higher exclusion applies to gifts made to a spouse who is not a United States citizen.
Common questions
- Does the annual exclusion apply per donor or per couple?
- The exclusion applies per donor per recipient. Each donor has their own $14,000 annual exclusion for each recipient in 2017, so spouses can each give $14,000 to the same person without reporting a gift.
- Do gifts of future interests qualify for the annual exclusion?
- No. Under Internal Revenue Code section 2503, only present-interest gifts qualify for the annual exclusion.
When a gift needs no return at all
A donor does not have to file Form 709 at all if three conditions are met simultaneously. First, the donor made no gifts to a spouse during the year. Second, the donor did not give more than $14,000 to any single donee. Third, every gift made was of a present interest. A present interest means the recipient had an immediate right to use, possess, and enjoy the property or its income; a gift that defers those rights to a later date is a future interest and does not qualify. There is also a separate shortcut for donors whose only gifts during the year went to qualified charities and who transferred their entire interest in the property to those charities; in that case no return is needed either. If any condition fails - for example, a gift exceeded $14,000, a gift was a future interest, or a gift was made to a spouse (other than a deductible marital deduction transfer) - the donor must file Form 709 and report the gifts, even if no tax is ultimately owed because of exclusions or deductions.
Who does not need to file. If you meet all of the following requirements, you are not required to file Form 709. You made no gifts during the year to your spouse. You did not give more than $14,000 to any one donee. All the gifts you made were of present interests.
2017 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
The gifts the exclusion does not cover
A gift of a future interest is not eligible for the $14,000 annual exclusion at all, so the donor must file Form 709 to report it even when the total value given to that donee during the year is well below $14,000. A present interest exists when the donee has the immediate right to use, possess, and enjoy the property or the income it produces. A future interest, by contrast, is one where the donee's rights to use, possess, or enjoy the property or its income will not begin until some later date - such as reversions, remainders, or similar interests or estates that take effect only after a period of time or a specified event. Because the annual exclusion is limited by law to gifts of present interests, any transfer that defers the recipient's enjoyment simply cannot qualify, regardless of the dollar amount. Donors therefore need to examine the legal nature of what they are giving, not just its value, before concluding that a return can be skipped.
A gift of a future interest cannot be excluded under the annual exclusion. A gift is considered a present interest if the donee has all immediate rights to the use, possession, and enjoyment of the property or income from the property. A gift is considered a future interest if the donee's rights to the use, possession, and enjoyment of the property or income from the property will not begin until some future date.
2017 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
Who actually owes the gift tax
Under the federal gift tax rules, the person who makes the gift - not the person who receives it - is the one who owes any gift tax that may be due. The IRS looks to the donor to file Form 709 and to pay the tax calculated on it. The instructions do, however, name a fallback: if the donor fails to pay, the recipient of the gift can be held liable for the unpaid tax. This is a collection backstop rather than a shift of primary responsibility. The rule also survives the donor's death: when a donor dies before filing a return, the executor of the donor's estate must file the return on the donor's behalf. For practical purposes, the donee does not include the value of a gift in gross income, but should understand that the donor's failure to satisfy the tax obligation could eventually create exposure for the recipient as well.
The donor is responsible for paying the gift tax. However, if the donor does not pay the tax, the person receiving the gift may have to pay the tax. If a donor dies before filing a return, the donor's executor must file the return.
2017 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
Splitting a gift with your spouse
A married couple may not file a single joint gift tax return. Instead, each spouse files his or her own Form 709. If both spouses consent, however, all gifts made by either of them to third parties during the calendar year - including gifts of property held jointly as joint tenants or tenants by the entirety - are treated as having been made one-half by each spouse. To elect this treatment, both returns must be filed together in the same envelope, and the consent requirements must be met: the spouses must have been married to each other at the time of each gift, neither may have been a nonresident not a citizen of the United States at the time of the gift, and if either divorced or became widowed during the year, that spouse must not have remarried before the end of the same calendar year. The effect of the election is that each spouse is treated as having given half of every covered gift, so each can apply his or her own annual exclusion and other deductions to that half.
A married couple may not file a joint gift tax return. However, if after reading the instructions below, you and your spouse agree to split your gifts, you should file both of your individual gift tax returns together (that is, in the same envelope) to help the IRS process the returns and to avoid correspondence from the IRS. If you and your spouse both consent, all gifts (including gifts of property held with your spouse as joint tenants or tenants by the entirety) either of you make to third parties during the calendar year will be considered as made one-half by each of you if all of the following apply. You and your spouse were married to one another at the time of the gift.
2017 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
When the return is due
Gift tax returns are filed on Form 709, which the IRS treats as an annual return. For gifts made during 2017, the donor generally must file the return after January 1 but no later than April 15, 2018 - the year after the year in which the gift was made. If April 15 falls on a Saturday, Sunday, or legal holiday, the deadline shifts to the next business day. Donors cannot file the return early; even if all gift details are known during 2017, the form must wait until the following calendar year begins. A separate rule applies when the donor dies during 2017: the executor must file the decedent's Form 709 by the earlier of the estate tax return due date (including extensions) or the gift tax return deadline. Filing on time matters because elections reported on the return - such as the allocation of the $14,000 annual exclusion per recipient or the use of the lifetime exemption - take effect only when the return is filed within this window.
Form 709 is an annual return. Generally, you must file Form 709 no earlier than January 1, but not later than April 15, of the year after the gift was made.
2017 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
Room you do not use for one person this year is simply gone
For 2017, the IRS allows each donor to give up to $14,000 to each donee during the calendar year without the gift counting toward the donor's taxable total. This exclusion applies separately to every person who receives a gift, but only if the gift is a present interest - meaning the recipient has immediate use of the property. Any portion of the $14,000 that a donor does not use for a particular donee in 2017 cannot be carried over or saved for future years. If a donor gives less than $14,000 to someone, or gives nothing at all, the unused amount simply expires at the end of that calendar year. The exclusion resets each year at $14,000 per donee, but it does not accumulate. For gifts placed in trust, each beneficiary counts as a separate donee for purposes of this annual exclusion, so a trust with multiple beneficiaries can shelter more than $14,000 in total, provided each beneficiary's share qualifies as a present interest.
The first $14,000 of gifts of present interest to each donee during the calendar year is subtracted from total gifts in figuring the amount of taxable gifts. For a gift in trust, each beneficiary of the trust is treated as a separate donee for purposes of the annual exclusion.
2017 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
Understating what a gift was worth carries its own penalty
When a donor files Form 709 to report gifts, the IRS can impose penalties if the value reported for the gifted property is significantly lower than its actual worth. A substantial valuation understatement occurs when the reported value entered on the return is 65% or less of the property's true value, and this understatement leads to an underpayment of gift tax. If the error is even more severe - a gross valuation understatement where the reported value is 40% or less of the actual value - the penalty is higher. These valuation penalties exist to discourage donors from deliberately undervaluing gifts to reduce their tax liability. The IRS applies these penalties separately from other consequences, such as penalties for willful failure to file or attempts to evade tax. Donors who face a valuation penalty notice can send an explanation to the IRS, which will determine whether reasonable cause existed for the understatement.
A substantial valuation understatement occurs when the reported value of property entered on Form 709 is 65% or less of the actual value of the property. A gross valuation understatement occurs when the reported value listed on the Form 709 is 40% or less of the actual value of the property.
2017 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
Giving more than the exclusion does not automatically mean tax is owed
Giving more than the annual exclusion to one recipient in a year does not automatically mean gift tax is owed. Every dollar of taxable gifts above the annual exclusion is applied against a separate, much larger lifetime allowance - the basic exclusion amount under IRC section 2010(c), the same allowance a person's estate draws on at death. Tax is due only once a donor's cumulative taxable gifts exceed that allowance. The IRS's instructions for Form 709 state it directly: for 2017, the donor's basic exclusion amount is $5,490,000. Because that amount changes from year to year and can also be changed by legislation, see this site's estate tax exemption page for how the current year's basic exclusion amount is set and how it interacts with lifetime gifts.
On line 1, enter the donor's basic exclusion amount; for 2017, this amount is $5,490,000.
2017 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Rev. Proc. 2016-55 (IRS)
- Annual exclusion per recipient
(1) For calendar year 2017, the first $14,000 of gifts to any person (other than gifts of future interests in property) are not included in the total amount of taxable gifts under § 2503 made during that year.
- Annual exclusion for a gift to a noncitizen spouse
(2) For calendar year 2017, the first $149,000 of gifts to a spouse who is not a citizen of the United States (other than gifts of future interests in property) are not included in the total amount of taxable gifts under §§ 2503 and 2523(i)(2) made during that year.