Georgia does not have a gift tax. The state repealed its estate tax in 2014 and has never imposed a standalone gift or inheritance tax, so no transfer between Georgia residents triggers a state-level tax bill, regardless of the amount.1Georgia Department of Revenue. Estate Tax – FAQ What Georgia residents do need to watch is the federal gift tax, which kicks in reporting requirements once a gift to any single person crosses $19,000 in 2026.
The Federal $19,000 Annual Exclusion
The federal gift tax applies to transfers of money or property where the giver receives nothing of equal value back. It’s the giver, not the recipient, who is responsible for any tax and for filing.
Under IRC § 2503, you can give up to $19,000 per recipient in 2026 with no tax consequences and no paperwork.2Internal Revenue Service. What’s New – Estate and Gift Tax The limit resets each year and applies separately to each person you give to. Give $19,000 to each of ten different people, and you owe nothing and file nothing. A married couple can combine their exclusions to move up to $38,000 to a single recipient in 2026, though doing so requires a gift-splitting election on both spouses’ returns.
The exclusion is indexed to inflation but moves only in $1,000 increments, so it can hold steady for several years before the next bump.3Office of the Law Revision Counsel. 26 USC 2503 – Taxable Gifts
Gifts That Don’t Count at All
Some transfers sit entirely outside the gift tax system. They don’t consume your annual exclusion, don’t reduce your lifetime exemption, and don’t need to be reported.
Tuition and Medical Bills Paid Directly
Under IRC § 2503(e), payments made directly to an educational institution for tuition or directly to a medical provider are fully excluded, with no dollar limit.3Office of the Law Revision Counsel. 26 USC 2503 – Taxable Gifts The word “directly” carries the weight. Writing a check to the university bursar for your grandchild’s tuition qualifies. Reimbursing your grandchild after they’ve already paid does not, and the transfer becomes an ordinary gift.
Only tuition itself qualifies on the education side. Room, board, books, and supplies do not. On the medical side, the exclusion covers most medical and dental services, prescriptions, and health insurance premiums, but not items like gym memberships or elective cosmetic work.
Gifts Between Spouses
Under IRC § 2523, transfers between spouses who are both U.S. citizens qualify for an unlimited marital deduction. You can move any amount of cash or property to a citizen spouse without gift tax consequences.4Office of the Law Revision Counsel. 26 USC 2523 – Gift to Spouse If the recipient spouse is not a U.S. citizen, the deduction disappears and a higher-than-normal annual exclusion applies instead — $194,000 for 2026.2Internal Revenue Service. What’s New – Estate and Gift Tax
529 Plan Front-Loading
Contributions to a 529 education savings plan count as gifts to the beneficiary, but IRC § 529(c)(2)(B) lets you compress five years of annual exclusions into a single contribution.5Office of the Law Revision Counsel. 26 USC 529 – Qualified Tuition Programs For 2026 that means one person can drop up to $95,000, or a married couple up to $190,000, into a 529 for one beneficiary and spread the gift over five years for tax purposes. No tax, no lifetime exemption used, provided you make no further gifts to the same beneficiary during those five years. If you die inside the five-year window, the unused portion comes back into your estate.
The $15 Million Lifetime Exemption
When a gift to one recipient in one year goes over $19,000 and doesn’t fall into an excluded category, the excess starts eating into your lifetime gift tax exemption. For 2026 that exemption is $15,000,000 per person.2Internal Revenue Service. What’s New – Estate and Gift Tax The figure was set by the One, Big, Beautiful Bill (Public Law 119-21), signed on July 4, 2025, which amended IRC § 2010(c)(3) and replaced the prior $13.99 million exemption.6Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax
The lifetime exemption is unified with the federal estate tax exemption under IRC § 2505, so every dollar you spend on lifetime gifts reduces what’s left to shelter your estate at death.7Office of the Law Revision Counsel. 26 USC 2505 – Unified Credit Against Gift Tax Here’s how it works in a specific case. You give one person $119,000 in 2026. The first $19,000 falls under the annual exclusion. The other $100,000 gets reported on Form 709 and subtracted from your $15,000,000, leaving $14,900,000. You owe no tax. You’d only actually write a check to the IRS after your cumulative excess gifts had burned through the full $15 million.
Starting in 2027, the $15 million figure adjusts for inflation, rounded to the nearest $10,000.6Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax
Rates If You Actually Owe Gift Tax
For the rare person who does exhaust the $15 million lifetime exemption, gifts beyond that are taxed at graduated federal rates from 18% to 40%, with the 40% top rate applying to taxable transfers more than $1,000,000 above the exemption.8Office of the Law Revision Counsel. 26 USC 2001 – Imposition and Rate of Tax The rates are steep, but the exemption keeps this a real concern for a very small group of taxpayers.
Gift Splitting for Married Couples
Under IRC § 2513, married couples can elect to treat a gift made by one spouse as if each spouse made half.9Office of the Law Revision Counsel. 26 USC 2513 – Gift by Husband or Wife to Third Party The effect is a $38,000 per-recipient exclusion for 2026 and the ability to use both spouses’ lifetime exemptions against larger gifts. Both spouses must be U.S. citizens or residents, both must consent, and the election applies to every gift either spouse made that year — you cannot pick and choose.
Consent is recorded on Form 709. Both spouses file their own Form 709 for the year, even if only one made the gift. The election has to be made by April 15 of the year after the gift.
Filing Form 709
Any gift over the $19,000 annual exclusion has to be reported on Form 709, the United States Gift (and Generation-Skipping Transfer) Tax Return, even when no tax is due.10Internal Revenue Service. About Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return The form’s job is to track how much of your lifetime exemption you’ve already used. Skipping the filing is a common and costly mistake: without a record, the IRS has no way to confirm your remaining exemption when your estate is settled.
Form 709 is due April 15 of the year after the gift. An extension of your personal income tax return on Form 4868 automatically extends your Form 709 deadline as well.11Internal Revenue Service. Instructions for Form 709 Spouses cannot file jointly on Form 709; each files separately, even when splitting gifts.
Gifts that stay inside the annual exclusion, the direct-pay tuition and medical exclusions, or the unlimited marital deduction do not have to be reported at all.
The Basis Trap When You Gift Appreciated Property
Federal gift tax rules are only half the picture. The other half is what happens when the recipient eventually sells what you gave them. Under IRC § 1015, a person who receives a gift takes the donor’s original cost basis.12Office of the Law Revision Counsel. 26 USC 1015 – Basis of Property Acquired by Gift If you bought stock for $10,000 and gift it to your child when it’s worth $100,000, your child’s basis is still $10,000. When they sell, they pay capital gains tax on $90,000.
Inherited property is treated differently. Under IRC § 1014, assets passed at death generally receive a stepped-up basis equal to fair market value on the date of death.13Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent That same $100,000 stock, if inherited rather than gifted, gets a $100,000 basis, and your child could sell it immediately owing nothing on the gain.
For highly appreciated assets like real estate or long-held stock, holding until death and letting the basis step up can save the recipient more than the gift tax rules would have cost you. The right answer depends on the size of the built-in gain, your remaining exemption, and whether the asset is likely to keep appreciating. Ignoring basis is how a well-intended gift quietly turns into a six-figure tax bill for the person you wanted to help.