How does the $19,000 gift tax annual exclusion work in 2025?

In 2025 you can give up to $19,000 to any one person without any gift tax consequences and without filing a gift tax return, and there's no limit on how many people you give to. A married couple can combine their exclusions to give $38,000 per recipient. These gifts don't reduce your lifetime estate and gift tax exemption (about $13.99 million per person in 2025), so the annual exclusion is a clean way to move wealth to children or grandchildren over time. Gifts above the limit aren't necessarily taxed; they just require a Form 709 and chip away at your lifetime exemption. Paying someone's tuition or medical bills directly to the institution doesn't count against the limit at all. This is a core estate-planning tool; see wealthserene.com/goals/leave-a-legacy to think it through.