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If you want to give each of your children $50,000, the IRS gift tax rules determine whether taxes apply. In 2025, the annual exclusion allows you to give up to $19,000 per child without any filing requirements. Anything above that can either be shared with a spouse through gift-splitting or applied against your lifetime exemption of $13.99 million. By timing or structuring the gifts carefully, you can transfer $50,000 to each child without triggering immediate tax liability.
Do you have questions about financial planning for retirement or gift-giving? Speak with a financial advisor today.
Gift Tax Basics
The federal gift tax applies when you transfer money or assets without receiving something of equal value in return. Taxable gifts can include cash, stocks, real estate or other property. The tax is generally paid by the giver, although in rare cases the recipient can agree to cover it.
Two main exclusions determine whether a gift is taxable. The annual exclusion allows you to give up to $19,000 per person in 2025 without paying tax or even reporting the gift. This amount applies on a per-person basis, so you can give $19,000 to as many people as you like in a year without it adding up.
In addition, there is a lifetime gift and estate tax exemption of $13.99 million in 2025. The number will jump to $15 million in 2026, as part of the One Big Beautiful Bill Act. Gifts that exceed the annual exclusion reduce this exemption amount, but no tax is owed until your cumulative lifetime gifts surpass the exemption. Because of this, very few people end up paying gift taxes.
There are also special exclusions. Unlimited gifts can be made to a U.S. citizen spouse. Payments made directly to educational institutions for tuition, or to healthcare providers and insurers for medical care, are not considered taxable gifts.
If you make a gift above the annual exclusion, you’ll need to file Form 709 to report it. Married couples who split gifts must also file Form 709, even if each share of the gift falls under the annual limit.
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 $19,000. Assuming you’ve already given away enough to be in excess of the $13.99 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 $19,000 | No tax | $0 |
| Next $10,000 | 18% | $1,800 |
| Next $10,000 | 20% | $2,000 |
| Last $11,000 | 22% | $2,420 |
In this case, the total tax on each $50,000 gift would be $6,220 ($1,800 + $2,000 + $2,420). Again, unless you have given more than $13.99 million in your lifetime (as of 2025), you won’t owe any gift taxes at all.
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 $13.99 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 2025 amount (which may increase in 2026), you could give $19,000 this year, $19,000 next year and $12,000 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 $19,000 to each child each year, for a total of $38,000 annually, without crossing the reporting or tax threshold. This would still potentially subject $12,000 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 $19,000, 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 exemption amount ($13.99 million in 2025 and $15 million in 2026) 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 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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