Glossary

Gift tax annual exclusion

The amount you can give any one person each year without filing a gift tax return or using lifetime exemption: $19,000 per recipient in 2026, per the IRS.

Also called: annual exclusion, annual gift exclusion, gift tax exclusion

The gift tax annual exclusion is the amount a person can give to any one recipient in a calendar year without the gift counting against their lifetime estate and gift tax exemption or requiring a gift tax return. For 2026 it is $19,000 per recipient, unchanged from 2025, according to the IRS. A married couple who elect gift-splitting can give $38,000 to each person. The figure is adjusted for inflation and rounded down to a multiple of $1,000.

Life insurance meets the exclusion most often through premiums. Say, hypothetically, you fund an irrevocable life insurance trust that owns a policy with a $12,000 annual premium and has three adult children as beneficiaries. Each year you give the trust the premium, the trustee sends each child a crummey letter offering a temporary right to withdraw their share, and that right makes the gift a "present interest" that qualifies: $4,000 per child, well under $19,000.

Gifts to a trust qualify only if beneficiaries have a real present-interest right, so skipping the notices can disqualify them. Paying premiums on a policy someone else owns is also a gift. Going over the exclusion usually means filing a return, not owing tax. See gift tax and life insurance premiums, and ask an estate attorney or tax professional for specifics.

Last reviewed October 4, 2026

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Related terms

Crummey letter A written notice telling a trust beneficiary of a temporary right to withdraw a new contribution, so the gift qualifies for the annual gift tax exclusion. Irrevocable life insurance trust (ILIT) A trust that owns life insurance and can't be changed or revoked by its creator, keeping the death benefit out of the insured's taxable estate. Federal estate tax exemption The amount a person can pass at death or give during life before federal estate and gift tax applies: $15 million per person for 2026, per the IRS. Estate tax A federal tax on the transfer of a deceased person's assets above an exemption amount, with a top rate of 40%; some states levy their own. Payor The person or entity that pays a policy's premiums, who may be someone other than the owner, the insured or the beneficiary.

Related guides

Gift tax and life insurance premiums When paying premiums or transferring a policy is a gift, how the 2026 $19,000 annual exclusion and $15 million exemption apply, and when to file Form 709. The Goodman triangle: an expensive ownership mistake What happens when the owner, insured and beneficiary of a life policy are three different people: a possible gift of the full death benefit, and how to fix it. Irrevocable life insurance trusts (ILITs) An ILIT owns your policy so the death benefit stays out of your taxable estate. How it works, Crummey gifts, the three-year rule, costs and who needs one. Life insurance and the federal estate tax Death benefits are included in your taxable estate if you own the policy or it pays your estate (IRC §2042). How the 2026 $15 million exemption applies. Life insurance for grandchildren Grandparents can insure a grandchild or insure themselves and leave proceeds to grandchildren. Rules, taxes and trade-offs of each approach. Life insurance for high-net-worth families Where life insurance still fits for wealthy families: estate liquidity, ILITs, survivorship policies, business succession, with 2026 estate tax figures.

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Estate tax exposure check Estimates 2026 federal estate tax on your assets and life insurance, and shows how much of it comes from policies you own.